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HCL Technologies: A Dull Performance - Views on News from Equitymaster

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HCL Technologies: A Dull Performance
Dec 28, 2017

HCL Technologies announced its second quarter results for FY18. The company reported a 2.3% QoQ increase in sales and a 0.2%% QoQ fall in net profits. Here is our analysis of the results.

Performance Summary
  • Consolidated sales increased 2.3% QoQ in 2QFY18. In constant currency terms, sales were up 0.9% QoQ. In US$ terms, sales were up 2.3% QoQ.
  • Operating profits were up 2.3% QoQ. The operating margin was flat sequentially at 21.9%.
  • The other income was up 6.1% QoQ while depreciation & amortization increased 30.4% QoQ.
  • The consolidated net profit decreased 0.2% QoQ.
  • The company declared an interim dividend of Rs 2 per share.

    Consolidated Financials
    (Rs m) 1QFY18 2QFY18 Change 1HFY17 1HFY18 Change
    Sales 121,490 124,330 2.3% 228,560 245,820 7.6%
    Expenditure 94,910 97,140 2.3% 179,070 192,050 7.2%
    Operating profit (EBITDA) 26,580 27,190 2.3% 49,490 53,770 8.6%
    Operating profit margin (%) 21.9% 21.9%   21.7% 21.9%  
    Other income (net of forex gain/loss) 3,130 3,320 6.1% 5,370 6,450 20.1%
    Finance costs 180 110 -38.9% 390 290 -25.6%
    Depreciation & Amortization 2,270 2,960 30.4% 3,590 5,230 45.7%
    Profit before tax 27,620 27,660 0.1% 51,660 55,280 7.0%
    Tax 5,520 5,720 3.6% 10,900 11,240 3.1%
    Minority interest & share of profit of assocIates 10 130   -50 140  
    Profit after tax/(loss) 22,110 22,070 -0.2% 40,710 44,180 8.5%
    Net profit margin (%) 18.2% 17.8%   17.8% 18.0%  
    No. of shares (m)         1,392.0  
    Diluted earnings per share (TTM)         64.3  
    P/E ratio (x)*         13.7  

    *On trailing 12 month basis


    Segmental Performance
    (Rs m) 1QFY18 2QFY18 Change
    Revenue by service offerings      
    Application Services 44,101 44,634 1.2%
    Engineering and R&D services 26,120 27,353 4.7%
    Infrastructure Management Services 46,895 47,867 2.1%
    BPO 4,374 4,476 2.3%
    Revenue by geography      
    Americas 76,296 77,582 1.7%
    Europe 33,288 36,180 8.7%
    RoW 11,906 10,568 -11.2%
    Revenue by industry vertical      
    Financial services 30,251 31,083 2.7%
    Manufacturing 42,400 44,137 4.1%
    Telecom, Media & Entertainment 9,476 9,822 3.6%
    Retail & CPG 11,542 11,563 0.2%
    Healthcare 14,336 14,547 1.5%
    Public Services 13,485 13,179 -2.3%
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Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

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  3. Equitymaster's Associate has financial interest in HCL Technologies.
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