HCL Tech Q3 net up 33%; all is well, says Nayar

The country's fifth biggest software service provider HCL Technologies on Wednesday beat street expectations by posting 33 per cent jump in consolidated net profit for the quarter ended March 31.

The stellar performance came on the back of strong growth across verticals. Company Vice Chairman and CEO Vineet Nayar said "all is well" and attributed the good results to early "strategic initiatives".

Revenues for the reported quarter were 31.5 per cent up at Rs 4,138.2 crore from Rs 3,132.1 crore in Q3 FY'10.

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"We had a good quarter and I would summarise that all is well. We had a 5.8 per cent sequential growth in revenues which is a result of the strategic initiatives we took in the beginning of the year," Nayar told reporters here.

HCL Technologies shares touched a 52-week high at Rs 525.95 a piece in early trade. The stock closed at Rs 522.85 a piece, up 9.93 per cent from its previous close on the Bombay Stock Exchange.

Both marketmen and industry analysts cheered the results.

"HCL Tech's results are above our estimates. The revenue growth and improvement in margins were higher than expected.

The consistent performance in the future may provide decent upside to the stock price," Kotak Securities Senior VP (Private Client Group Research) Dipen Shah said.

Last week, IT bellweather Infosys' results had sparked worries about the sector's health after it posted poor quarter results. It also forecast a weak outlook for FY 2011-12 on slow client spending.

Industry peers Tata Consultancy Services (TCS) and Wipro will announce their results tomorrow and on April 27, respectively.

"The results are above expectations and margin improvement is also worth noting. The results are indicative of a maturing industry and are in line with industry growth rates," Everest Group Partner Nikhil Rajpal said.

The HCL Tech's board has proposed a dividend of Rs 2 for the third quarter on the face value of Rs 2 each.

Net employee addition stood at 1,153 for the period, taking the total headcount to 73,420. The company added 58 new clients during the last 12 months.

HCL Technologies also said it has bought certain software assets from Citibank International Plc during the third quarter for $26 million, which will be funded through internal accruals.

As part of the acquisition, HCL will absorb 41 employees from Citi and get an assured revenue stream of USD 135 million spread over 10 years, it said.