HCL Tech profit up 12.3% to ₹2,325 crore

India’s fourth largest IT company HCL Technologies Ltd on Thursday reported a March quarter net profit of ₹2,325 crore, up 12.3% from the December quarter. During the same period, revenue rose 2.0% to touch ₹12,053 crore.

The company added more clients during the quarter and focused on growth areas like digital, cloud, security and internet of things (IoT).

Revenues from Mode 2 and Mode 3 offerings (which focus on new growth areas like digital, cloud, security and IoT) together grew 30.9% in the 12-month period ending March. HCL said.

There was broad-based growth in revenues across verticals driven by public services at 31.3%, retail and consumer packaged goods at 21.4%, life sciences and healthcare at 11.1%, manufacturing at 17.0%, telecommunications, media, publishing and entertainment at 5.8%, and financial services at 4.9% (on constant currency basis).

The company expects FY18 revenue to grow 10.5-12.5% in constant currency. This constant currency guidance translates to 9.9% to 11.9% in dollar terms based on March 31 rates. Operating margin (earnings before interest and tax) for FY18 is expected to be in the range of 19.5-20.5%.

“We are glad about the overall fiscal 2017 and the quarter performance. Our cash flow generation during the year continues to be robust with net income to operating cash flow conversion at 112%. Our focus on rewarding shareholders continues with the announcement of ₹3,500 crore buyback program. Return on equity continues to be healthy at 27% for the year,” said Anil Chanana, chief financial officer, HCL Technologies.

When asked if HCL Tech would see layoffs like in some of its peers, C. Vijayakumar, president and CEO, HCL Tech, said: “We are on a positive trajectory and are focussed on hiring and reskilling employees. I don’t expect layoffs. We operate in a lean model.”

Analysts are concerned that amidst rising protectionism, Indian IT services providers are already experiencing tepid growth and uncertainty. However, the management said 55% of HCL’s workforce in the US are locals and this number is likely to rise.

“So, HCL has a low dependence on H-1B visas and we are better prepared to handle it,” Vijayakumar said in a telephonic interview. He added that as a geography, HCL was committed to investing in the US.

Twelve of the 41 global delivery centres are in the US, and there are plans to launch a cyber security fusion centre. HCL reported adding thirteen $5 million-plus clients, nine $10 million-plus clients, ten $20 million-plus clients, five $25 million-plus clients and six $50 million-plus clients during the financial year.