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HCL Tech: Along Expected Lines - Views on News from Equitymaster
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HCL Tech: Along Expected Lines
Oct 6, 2017

HCL Technologies announced its first quarter results for FY18. The results are not comparable due to the acquisitions of PLM services and Geometric Ltd (engineering design business) completed in the previous quarter.

Performance summary
  • Consolidated sales decreased by 5.8% QoQ in 1QFY18. On a like-to-like basis i.e. excluding the effect of the recent acquisitions, sales were up 0.8% QoQ. Similarly, in constant currency terms, sales were up 2.6% QoQ.
  • Operating profits were flat sequentially. The operating margin improved to 21.9%.
  • The consolidated net profit decreased by 10.6% QoQ. On a like-to-like basis i.e. excluding the effect of the recent acquisitions, the net profit was down 6.6% QoQ.
  • The company declared a dividend of Rs 2 per share. The management stated they would continue with the quarterly dividend policy.

    Consolidated Financials
    (Rs m) 4QFY17 1QFY18 Change
    Sales 128,980 121,490 -5.8%
    Expenditure 102,070 94,910 -7.0%
    Operating profit (EBITDA) 26,910 26,580 -1.2%
    Operating profit margin (%) 20.9% 21.9%  
    Other income (net of forex gain/loss) 2,850 3,130 9.8%
    Finance costs 280 180 -35.7%
    Depreciation & Amortization 2,590 2,270 -12.4%
    Profit before tax 27,450 27,620 0.6%
    Tax 2,750 5,520 100.7%
    Minority interest & share of profit of assocIates 30 10  
    Profit after tax/(loss) 24,730 22,110 -10.6%
    Net profit margin (%) 19.2% 18.2%  
    No. of shares (m)   1,392.0  
    Diluted earnings per share (TTM)   59.9  
    P/E ratio (x)*   14.9  

    *On trailing 12 month basis


    Segmental Performance
    (Rs m) 4QFY17 1QFY18 Change
    Revenue by service offerings      
    Application Services 47,465 44,101 -7.1%
    Engineering and R&D services 26,441 26,120 -1.2%
    Infrastructure Management Services 50,044 46,895 -6.3%
    BPO 5,030 4,374 -13.1%
    Revenue by geography      
    Americas 80,741 76,053 -5.8%
    Europe 35,727 33,288 -6.8%
    RoW 12,511 11,906 -4.8%
    Revenue by industry vertical      
    Financial Services 31,213 30,251 -3.1%
    Manufacturing 44,627 42,400 -5.0%
    Telecom, Media & Entertainment 10,834 9,476 -12.5%
    Retail & CPG 11,866 11,542 -2.7%
    Lifesciences & Healthcare 14,833 14,336 -3.3%
    Public Services 15,091 13,485 -10.6%
    Others 516 0 N.A
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