HCL Technologies has reported a 43.3 per cent jump in its net profit to Rs 572.7 crore in the second quarter ended December 31 on account of stable demand of new contracts and weaker rupee. The company had reported a net profit of Rs 399.7 crore for the corresponding period last year.
Speaking on the results, Mr Vineet Nayar, Vice-Chairman and CEO, HCL Technologies, said, “We have bagged 18 large contracts worth $1 billion in the second quarter. Healthcare, manufacturing and financial services are our growth area.”
The results from HCL, come against the backdrop of the continuing debt crisis in Europe and uncertainties in the US — the two largest markets for Indian outsourcing and software companies. Infosys, India's second-largest software exporter, last week dented investor sentiment by reporting a muted quarterly performance and by cutting its estimate on sales in dollar terms for the fiscal year through March.
Acquisition plans
The company said it has put on hold its acquisition plans as the global economic situation is uncertain and the local currency is volatile. “We were bullish about inorganic growth till three months ago. However, there are three uncertainties that have come up. One what is going to happen to the euro. Second, what will happen to the currency (rupee) and number three what will happen to the total spend across the globe on IT,” Mr Nayar said.
“We are now waiting for the euro crisis and currency fluctuation to settle a bit for us to have a little longer term view of what's going to happen. And then take a decision on what would make sense as acquisition,” he added. HCL Tech had earlier said the economic uncertainties would throw up opportunities to acquire companies and it would look at buying companies at the right valuation.
Further, the IT company has increased the use of range forward contracts in its hedging portfolio to protect its foreign revenue against currency fluctuations. HCL's range forward contracts limit the company's dollar exposure to an average range of Rs 49 to Rs 53. It had outstanding currency hedges worth $1.2 billion as of December 31.
Recruitment strategy
On recruitment strategy for 2012, Mr Nayar said, “We will hire freshers in the beginning of the year and laterals in the later part of the year.” During the quarter, the company added 7,804 (gross) and 2,556 (net) employees, taking its total headcount to 83,076 by the end of December 31, 2011.
Revenues from American markets saw a year-on-year growth of 21.7 per cent in second quarter. Europe grew by 19.1 per cent in the period under review. HCL Technologies shares closed at Rs 424.75 on the BSE, up 4.61 per cent from their previous close.
Going forward, the company is looking to grab a slice of $47 billion worth of global contracts up for renewal in 2012, as customers seek new approaches to navigate the global economic slowdown.
“A lot of churn is happening in the Global 500 customer base,” Mr Nayar said. “They are seeking new vendors with new ideas, new propositions, with new way of approaching a problem, and that newness is opening the market space as never before.”
FII limit
The board announced the increase in FII limit to 49 per cent from 24 per cent. The company also declared an interim dividend of Rs 2 per equity share of Rs 2 face value.