Slip’s Show­ing: HCL Tech’s Q3 Nos Fail to Match Peers’

Though rev­enue was lower than ex­pected, tech ma­jor re­mains bullish say­ing it is wit­ness­ing healthy growth in all ser­vice lines and ge­ogra­phies

The Economic Times - - Disruption: Startups & Tech -

Surabhi Agar­wal & Neha Alawadhi

New Delhi: In what is per­haps a sign of slow­ing growth for the com­pany, HCL Tech­nolo­gies on Thurs­day re­ported rev­enue and profit num­bers for the March quar­ter that were lower than those re­ported by its larger peers In­fosys and Tata Con­sul­tancy Ser­vices (TCS) and full year num­bers that missed the lower end of the Nass­com in­dus­try guid­ance by a sliver. HCL Tech’s stock fell 4.57% down on the BSE at .₹ 799.30 on a day when the bench­mark Sen­sex was down 1.77% to end at 25,603.10 points. The com­pany’s man­age­ment re­mained up­beat and said that apart from some soft­ness in the bank­ing and the fi­nan­cial ser­vices sec­tor, it is wit­ness­ing healthy growth in all ser­vice lines and ge­ogra­phies and has a “strong or­der book”. Shashi Bhu­san of IDFC wrote in a post earn­ing note that HCL Tech re­ported March quar­ter rev­enue be­low of con­sen­sus ex­pec­ta­tion and be­low IDFC’s. “We ex­pect stock to wit­ness downtick of 5-8%, driven by earn­ings down­grade as we see mul­ti­ple mar­gin head­winds in FY17.” He added that the com­pany re­ported change of +1.9% and -11.3% QoQ in re­peat and new busi­nesses re­spec­tively. More­over, top 10-20 clients wit­nessed de-growth of 1.5% QoQ. “We see de­cline in new busi­ness to be a mat­ter of con­cern,” he said. For the three months ended March 31, 2016, HCL Tech re­ported a 5.5% jump in net profit at $285 mil­lion which came on back of a 6.5% in­crease in rev­enues at $1.6 bil­lion com­pared to the same pe­riod last year. On a se­quen­tial ba­sis, net profit dropped 2% and rev­enue was up 1.3%. This was be­low the1.5% se­quen­tial jump in rev­enues an­nounced by TCS at $4.21 bil­lion and 1.6% re­ported by In­fosys at $2.45 bil­lion.

HCL, which has re­aligned its fi­nan­cial year from April to March from the ear­lier July to June also an­nounced full year rev­enues at $6,235 mil­lion, a con­stant cur­rency growth of 11.6%. In­dus­try body Nass­com had ear­lier said that it ex­pects the in­dus­try to grow be­tween 12-14% FY16 and later ar­riv­ing at a growth fig­ure of 12.3%. For cur­rent fis­cal, the body has trimmed the growth to 10-12% in FY17. Anant Gupta, CEO of HCL Tech­nolo­gies said that spend in the BFSI space will take a few quar­ters be­fore it gets bet­ter — how­ever, growth is com­ing from other sec­tors such as life sciences and health­care; re­tail and CPG, and tele­com and me­dia among oth­ers.

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