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HCL Tech: Good performance continued
Oct 18, 2012

HCL Technologies Ltd (HCL Tech) has announced the first quarter results (1QFY13) of financial year 2012-2013, (year ending June). The company reported a 2.9% quarter-on-quarter (QoQ) growth in sales and a 3.6% QoQ increase in net profits. Here is our analysis of the results.

Performance summary
  • Consolidated net sales grew by 2.9% QoQ in 1QFY13 (The company has a June year ending).
  • The growth in revenues was 2.9% QoQ on a constant currency basis and in terms of reported US dollar revenues, the growth in sales was 3.2% QoQ during the quarter. Thus, it is clear that rupee depreciation did not have a meaningful impact during the quarter and more importantly, a volume growth of 4.4% was witnessed during the quarter as compared to 3.4% in the last quarter.
  • There was a continued improvement in EBITDA margin as was witnessed during the last quarter: EBITDA margin expanded by 0.2% QoQ to 22.2% during the quarter as compared to 22% seen during the previous quarter. This was mainly because of the offshore shift in total revenues (44.3% in current quarter as compared to 42.8% in the last quarter) and increase in utilization (81.4% in current quarter as compared to 79.7% during the last quarter). On an absolute basis, EBITDA grew by 3.9%.
  • Net profit grew in line with EBITDA at 3.6% QoQ. The increase in net profit would have been even more had it not been for the effective tax rate, which increased to 23.5% in the current quarter from 22.8% recorded in the last quarter.
  • Net employee count grew sequentially by 1016 during the quarter. This was mainly due to a net addition of 946 in the head count of IT Services. Total employee base at the end of June 2012 was 85,335. In IT services business, attrition rate came down slightly to 13.6% as compared to 14.0% seen at the end of the previous quarter (4QFY12).
  • Added 38 new clients during the quarter. The total number of active clients at the end of September 2012 was sequentially flat at 536.

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