The company has been outperforming the information-technology industry over the past few quarters in revenue and volume growth. Its results come after all three of its larger local rivals--Tata Consultancy Services Ltd., Infosys Ltd. and Wipro Ltd.--cautioning about weak economic situation weighing on their business performance.
Based on U.S. accounting standards, HCL Technologies posted a consolidated net profit of 5.11 billion rupees ($115.3 million) in the April-June period, compared with 3.37 billion rupees a year earlier and 9% more from the quarter ended March 31. The average of estimates in a poll of 29 analysts was for 4.93 billion rupees.
It recorded a 83 million rupees forex gain, compared with a forex loss of 1.35 billion rupees a year earlier when hedging bets misfired. In the January-March period it took a 112 million rupees forex loss.
Sales climbed 28% from a year earlier to 43.00 billion rupees, slightly missing the market estimate of 43.30 billion rupees. Sales rose 3.9% sequentially, slower than the 5%-10% quarter-on-quarter growth HCL had posted during the rest of the fiscal year.
HCL's shares were trading down 2.3% at 503.00 rupees midday on the Bombay Stock Exchange, where the benchmark index was down 0.5%.
HCL's revenue growth over the past year has helped it narrow a valuation gap with its major rivals, CLSA Asia Pacific said. However, the latest quarterly report is somewhat of a set-back on that front, the house added.
Its earnings margin before interest, tax, depreciation and amortization widened to 18.5% from 17.3% in the third quarter, helped by lower expenses. But it was lower than the 18.6% margin reported a year earlier.
CLSA expects HCL's profit margin to be under pressure in the near term as the company is likely to raise staff salaries in the July-September period, its first fiscal quarter.
In the past quarter, HCL added 70 new clients, the most by a company in the sector during April-June. It hired 3,626 people on a net basis during the period, taking its employee count to 77,046 at the end of June.