HCL Tech 4Q FY2012 Result Beats Rivals Infosys, Wipro

By Anup Varier, 25-Jul-2012

While Wipro and Infosys fell short of analyst expectations with their Q1 FY2013 results, HCL Technologies has emerged unscathed by the economic uncertainties that seem to have affected its competition.

HCL Tech 4Q FY2012 Result Beats Rivals Infosys, Wipro
A five-fold increase in 100mn+ clients, a 31 percent increase in revenues, 54 percent increase in EBIT and 48 percent rise in net income year-on-year, establishes that industry leading growth can be achieved profitably Vineet NayarCEO and Vice Chairman, HCL Technologies

HCL Technologies has reported its Q4 and year-end results for its fiscal year ended June 30, 2012. The company, in stark contrast to its major competitors, beat all major analyst forecasts with a quarterly revenue increase of 12.1 percent Year-on-Year (YoY) to $1,080 Mn (INR 5919 crore at INR 54.83/USD).

"HCL Tech reported a strong set of results, beating market as well as our expectations on all fronts," said Ankita Somani, Research Analyst– IT, Angel Broking. "HCL Tech, with end-to-end IT capabilities and a strong client mining ability, is clearly emerging as a front runner and is outperforming many of its peers," she added.

HCL Tech reported an increase of 27.5 percent Quarter-on-Quarter for its Earnings Before Interests and Taxes (EBIT) at $210 Mn (INR 1148 crores). The Net Income at $156mn (approx INR 854 crores) was up 28.7 percent QoQ.

The company reported a 360 basis points QoQ expansion in EBITDA margin to 22.0 percent

In the same period Infosys saw a decline of 1.9 percent QoQ in its EBIT (Earnings Before Interests and Taxes) margins.

"Operating margin of this company has always been a concern and now management’s focus to improve this has been paid off. The company reported a 360 basis points QoQ expansion in EBITDA margin to 22.0 percent, which is commendable," said Somani.

The result also drew appreciation from Rikesh Parikh- VP, Markets Strategy and Product Development –Equities, Motilal Oswal Securities and said, "Contrary to other IT major HCL Tech has been able to win deals and maintain margins."

The top management was obviously pleased with the company's performance. "HCL Technologies has covered many milestones this year. In FY’12 the company continued to demonstrate its ability to navigate through economic turbulence and grow profitably by executing well," said Shiv Nadar, Chairman and Chief Strategy Officer, HCL Technologies.

There has been a lot of churn in the industry and HCL Tech is seen to have done well to capitalize on the trend. "HCL Tech has displayed an industry-leading growth trajectory and is clearly proving out to be one of the major beneficiaries in the vendor consolidation exercise going on in the industry," said Somani.

"A five-fold increase in 100mn+ clients, a 31 percent increase in revenues, 54 percent increase in EBIT and 48 percent rise in net income year-on-year, establishes that industry leading growth can be achieved profitably," said Vineet Nayar, CEO and Vice Chairman, HCL Technologies. "Industry leading growth in revenues and profits for Enterprise Applications Services has also demonstrated our ability to successfully scale blue ocean acquisitions," he added.

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