HCL Technologies delivered results in line with market expectations and surprised stakeholders with a positive outlook, especially with regard to a robust deal pipeline.

During the December quarter, while revenues rose 12.8 percent sequentially to Rs 5245 crore, net profits increased by 15.3 percent to Rs 573 crore. The revenue growth in dollar terms was 2 per cent.

On both these fronts, the numbers lagged its larger peers Infosys which reported 3.2 per cent dollar revenue growth, while for TCS the figure was 2.4 per cent.

HCL also had a marginal decline in realisations during the quarter. But what has been a key positive is the announcement of deals adding to a value of $1 billion, giving robust revenue visibility. Infosys too reported two deals of $500 million each and many large contracts and yet guided for a muted fourth quarter.

The difference, therefore, seems to be one of perception of risk, as across top players the performance and outlook indicates a reasonable growth path.

For HCL, its top verticals – manufacturing and financial services(together accounting for about 55 per cent of revenues) grew faster than the overall company rate, registering 2.8-3.7 per cent rise. Retail and healthcare grew at a faster pace, while telecom continued to decline.

What has been heartening is that the US (58.8 per cent of revenues) and Europe (26.8 per cent) grew at 7.4 per cent and 2.7 per cent, respectively, suggesting that the company continues to witness robust traction in the developed markets.

The company has also indicated that it has been a beneficiary of the vendor consolidation process undertaken by large customers. But its revenues from rest of the world, including markets such as India and some Asia-Pacific countries has fallen 16.1 per cent.

HCL has managed to win two new customers in the $100-million plus category and its top 10 clients have grown faster than the company, suggesting robust client-mining capabilities.

Though most of its service lines grew, its infrastructure services segment fell as rupee depreciation affected the hardware intensive business in India.

BPO segment

The BPO segment expanded in revenues but suffered increase in losses as wage costs rose.

Results from three of the top IT players suggest that there has been limited impact on the industry due to slowdown in key economies.

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