HCL Technology sustains growth momentum in April-June

HCL Technologies on Wednesday reported encouraging revenue and profit numbers for the quarter ended June. The numbers beat Street estimates, lending credence to expectations of a recovery in the Indian software services industry. All companies, including laggards such as Wipro, have pointed to a better demand environment and a return of discretionary spending in the United States, the biggest market for Indian software companies.

HCL reported net income of Rs 1,210 crore in the fiscal fourth quarter ended June 30, up 16.3 per cent over the previous three months. Revenue climbed 8.1 per cent sequentially to Rs 6,944 crore. In dollar terms, HCL's top line rose 3.1 per cent to $1.2 billion - a pace higher than that of larger rivals Infosys and Wipro. While revenue at Tata Consultancy Services, India's largest software exporter, grew the fastest at 4.1 per cent, Infosys climbed 2.7 per cent and Wipro inched up 0.2 per cent during the June quarter.

The results boosted HCL's share price. The stock was up 1.8 per cent on the Bombay Stock Exchange at Rs 925.50, while the benchmark Sensex was down 0.6 per cent at 11:40 a.m.

HCL recorded growth across service lines such as infrastructure services, engineering and R&D, business process outsourcing and application. The company's revenue for the full fiscal year stood at $4.7 billion. It has a headcount of 85,505.

HCL Technologies Chairman Shiv Nadar said the fiscal year's results have demonstrated significant business momentum and record customer satisfaction. "HCL continues to excel in agility and innovation with a business model that is resilient in a dynamic environment," he said in a statement.

Analysts cheered the results. Sanjeev Hota, analyst at brokerage Sharekhan, said profit was driven by lower taxes during the quarter and foreign-exchange gains. "Overall, it is a good performance. What matters in this market is consistency. HCL has been consistent and predictable," he said.

Ankita Somani of Angel Broking said the positive thing was the signing of 12 multi-million-dollar deals during the quarter. "HCL is sustaining its momentum. The only concern is soft growth in core software services," she said.