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HCL Tech: Ends FY17 on Expected Lines - Views on News from Equitymaster
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HCL Tech: Ends FY17 on Expected Lines
Jun 29, 2017

HCL Technologies announced its fourth quarter and full year results for FY17. The company reported a 9.2% QoQ increase in sales and a 20% QoQ increase in net profits. Here is our analysis of the results.

Performance summary
  • Consolidated sales increased by 9.2% QoQ in 4QFY17. In constant currency terms, sales were up 3.8% QoQ. In US$ terms, sales were up 4.1% QoQ.
  • Operating profit was up by 4.9% QoQ. The operating margin was lower sequentially at 20.9%.
  • The other income was up by 13.7% QoQ while depreciation & amortization increased 23.7% QoQ.
  • The consolidated net profit increased by 20% QoQ.
  • The management declared an interim dividend of Rs 6 per share.

    Consolidated Financial Performance
    (Rs m) 3QFY17 4QFY17 Change FY16 FY17 Change
    Sales 118,142 128,978 9.2% 311,359 475,675 52.8%
    Expenditure 92,486 102,061 10.4% 246,302 373,612 51.7%
    Operating profit (EBITDA) 25,656 26,917 4.9% 65,058 102,064 56.9%
    Operating profit margin (%) 21.7% 20.9%   20.9% 21.5%  
    Other income (net of forex gain/loss) 2,508 2,852 13.7% 8,661 10,733 23.9%
    Finance costs 224 278 24.5% 739 891 20.6%
    Depreciation & Amortization 2,096 2,593 23.7% 4,099 8,281 102.1%
    Profit before tax 26,292 27,455 4.4% 70,359 105,406 49.8%
    Tax 5,715 2,745 -52.0% 14,390 19,363 34.6%
    Minority interest & share of profit of assocIates -44 -25   -55 -20  
    Profit after tax/(loss) 20,620 24,735 20.0% 56,024 86,063 53.6%
    Net profit margin (%) 17.5% 19.2%   18.0% 18.1%  
    No. of shares (m)         1,426.8  
    Diluted earnings per share (TTM)         60.3  
    P/E ratio (x)*         14.1  

    *On the basis of trailing 12 months


    Segmental Performance
    (Rs m) 3QFY17 4QFY17 Change
    Revenue by service offerings      
    Application Services 44,303 47,464 7.1%
    Engineering and R&D services 21,974 26,440 20.3%
    Infrastructure Management Services 47,021 50,043 6.4%
    BPO 4,844 5,030 3.8%
    Revenue by geography      
    Americas 73,130 80,740 10.4%
    Europe 34,970 35,727 2.2%
    RoW 10,042 12,511 24.6%
    Revenue by industry vertical      
    Financial services 28,709 31,213 8.7%
    Manufacturing 40,050 44,626 11.4%
    Telecom, Media & Entertainment 10,515 10,834 3.0%
    Retail & CPG 11,105 11,866 6.8%
    Healthcare 14,177 14,832 4.6%
    Public Services 13,232 15,090 14.0%
    Others 354 516 45.6%
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