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For the October-December quarter, HCL Tech posted a net profit of $269.14 million (Rs 1,915 crore) compared with $/Rs 1,496 a year ago, helped by growth in demand for outsourcing business, the Noidabased company said on Friday. Its revenue was up 4% sequentially and 13% year-on-year to $1.491 billion (Rs 9,283 crore).
During the quarter, HCL booked about $1 billion worth of contracts, including 15 transformational deals. Investors cheered the news, sending HCL’s shares up 9% on the BSE to Rs 1,794.1.
Analysts on average were expecting a net profit of about Rs 1,774 crore, according to Bloombergestimates. "The global IT industry is undergoing a seismic change as the scope of IT buying expands to capture adjacencies beyond IT," said Shiv Nadar, chairman and chief strategy officer of HCL.
For India’s $118-billion IT industry, the latest quarterly report cards of top-tier companies such as Infosys, TCS, Wipro have raised concerns about tapering growth across an industry that now contributes nearly 5% to the country’s GDP.
Industry lobby Nasscom has already confirmed investors’ fears about stagnating growth in the sector and indicated that the earlier forecast for software export revenue growth might be revised down to 12-14% from the 13-15% forecast earlier. Technology researcher Gartner has also cut its global IT services growth forecast for 2015 to 2.5% from 4.1%. It has also trimmed its worldwide IT spending outlook for 2015 to $3.8 trillion.
But HCL’s latest numbers show that the top outsourcing customers continue to spend. The company’s CEO, Anant Gupta, said the company’s business from engineering services division helped. "We are starting to see engineering services customers move out of short-term projects to larger engagements," Gupta said.
He added that the division could potentially see a growth trajectory similar to how the infrastructure services business grew after the 2009 recession. "We are a year away from seeing an inflection point of growth for the division."
Experts say Indian investors will be closely watching US-based Cognizant Technology Solutions Corp’s results in early February to gauge what to expect for the next few quarters.
Over the past five years, Cognizant along with TCS has set the benchmark for the sector, grabbing market share from former bellwether firms Infosys and Wipro, which during the same period faced a decline in their fortunes that eventually prompted massive organizational overhauls at both Bangalore-based firms.
During this period, Infosys and Wipro have lagged HCL Tech, which has further whittled down the gap with the slightly larger Wipro — it has grown quarterly revenues faster than Wipro for more than four years now.
In the September quarter, HCL Tech had posted a 32% jump in quarterly net profit, driven mainly by healthy spending from top corporate buyers of technology.
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