HCL Tech Q4 net rises 21 per cent sequentially

HCL Technologies, one of the top-5 IT services companies in the country, has reported better than expected results for the fourth quarter ended 30th June 2006. The company has managed very impressive sequential growth in both revenues and profits and, unlike other frontline IT companies, has also kept operating margins steady.

For the 4th quarter ended 30th June 2006, HCL Tech has reported a 43.83 per cent year-on-year increase in consolidated net profits to Rs233 crore from Rs162 crore for the same quarter of previous year. Consolidated revenues increased 35.17 per cent to Rs1,253.8 crore from Rs927.6 crore.

On a quarter-on-quarter basis, consolidated net profits have increased 20.79 per cent from Rs192.9 crore for the Jan-March quarter. Consolidated revenues have also gone up 11.75 per cent as compared to the previous quarter.

Operating profits (EBITDA), excluding other income, have increased 33.3 per cent on a year-on-year basis and 12.7 per cent on a sequential basis. Operating margins improved very marginally to 22.4 per cent from 22.3 per cent for the previous quarter, but declined from 22.8 per cent achieved for the previous year quarter.

All 3 division of the company, IT Services, Infrastructure Management and BPO services, performed well during the quarter. IT Services, which contributed 74 per cent of revenues, has managed 10.3 per cent sequential growth in operating profits on a 11.4 per cent growth in revenues. BPO Services saw its operating profits rising 13.1 per cent on a quarter-on-quarter basis on revenue growth of 6.8 per cent.

The best performer was Infrastructure Management, reporting a 35.7 per cent sequential growth in operating profits on revenue growth of 19.7 per cent. Both BPO Services and Infrastructure Management contributed around 13 per cent each to total revenues during the 4th quarter.

In terms of geographies, contribution of the US declined to 57.8 per cent of total revenues during the quarter from 59.3 per cent during the quarter ended March 2006. Europe's contribution increased to 28.8 per cent from 25.7 per cent.

HCL Tech added one $10 million client and one $5 million client during the quarter. There was no major change in client concentration with the contribution of top-5 clients at 28.1 per cent as compared to 28.3 per cent during the previous quarter.

Offshore revenues increased to 69.2 per cent during the quarter as compared to 68 per cent during the previous quarter ended March 2006.

Full year consolidated revenues for the year ended 30th June 2006, fell short of the billion dollar mark at $976.03 million. In Rupee terms, consolidated net profits for the full year increased 27.06 per cent to Rs773.9 crore from Rs607.1 crore. Consolidated revenues increased 30.5 per cent to Rs4,388.2 crore from Rs3,362.7 crore for the previous year.

Operating profits for the full year increased 27.3 per cent over the previous year. Operating margins as a percentage of revenues declined to 22.2 per cent from 22.7 per cent for the previous year.

The company added 2,678 new employees during the quarter, with IT Services accounting for the maximum numbers at 1,709. For the full year 2005-06, HCL Tech added a total of 8,536 new employees. Total employee strength as of the end of the year was 32,626.