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HCL Tech: A poor start to FY16 - Views on News from Equitymaster
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HCL Tech: A poor start to FY16
Nov 16, 2015

HCL Technologies announced its first quarter results for FY16 (the company has a June year ending). The company reported a 3.3% QoQ increase in sales and a 2.3% QoQ rise in net profits. Here is our analysis of the results.
Performance summary
  • Consolidated sales increased by 3.3% QoQ in 1QFY16. In constant currency terms, sales were up 1.2% QoQ. In US$ terms, sales were up 0.5% QoQ.
  • Operating profits were up by 5.3% QoQ. The operating margin improved to 21.9% in 1QFY16 as compared to 21.5% 4QFY15. This was largely due to good control over SG&A costs in the quarter.
  • The other income was up by 24.4% QoQ while depreciation & amortization increased 8.9% QoQ.
  • The consolidated net profit increased by 2.3% QoQ. The bottomline was impacted by a one-time provision for a project.
  • The company has declared an interim dividend of Rs 5 per share.

Financial performance: A snapshot

(Rs m) 4QFY15 1QFY16 Change
Sales 97,770 100,970 3.3%
Expenditure 76,770 78,860 2.7%
Operating profit (EBITDA) 21,000 22,110 5.3%
Operating profit margin (%) 21.5% 21.9%  
Other income (net of finance costs) 1,760 2,190 24.4%
Forex gain/(loss) 360 220  
Depreciation & Amortization 1,240 1,350 8.9%
Profit before tax 21,880 23,170 5.9%
Tax 4,060 4,940 21.7%
Share of profit/(loss) of associates - -  
Minority interest - -  
Profit after tax/(loss) 17,820 18,230 2.3%
Net profit margin (%) 18.2% 18.1%  
No. of shares (m)   1,406.3  
Diluted earnings per share (TTM)   51.7  
P/E ratio (x)*   16.2  

*On a trailing 12-month basis and excluding extraordinary items

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