HCL Technologies' net profit zoomed to Rs 964.7 crore for the second quarter ended December 31, 2012, from Rs 572.7 crore in the October-December quarter of 2011. It follows July-June fiscal year.
The results are in line with those of larger rivals Infosys and Tata Consultancy Services, an indication of pickup in outsourcing deals.
Reacting to the results, HCL Tech shares closed higher by 4.31 per cent at Rs 703.30 on the BSE.
HCL Technologies' revenues stood at Rs 6,273.8 crore during the reported quarter, up 19.6 per cent from Rs 5,245.2 crore in the same quarter of FY12.
"Our growth this quarter was driven by infrastructure and financial services, both growing in excess of 10 per cent sequentially. Six large transformational deals have once again given us a billion dollar booking quarter," newly appointed CEO Anant Gupta told reporters here.
The company today announced that Gupta has been elevated to the position of President and CEO, replacing Vineet Nayar.
He was earlier serving as the President and Chief Operating Officer.
Nayar will continue as Vice Chairman and Joint Managing Director till July 2013 and as Vice Chairman thereafter.
"Vineet Nayar continues to mentor our leadership. He will be involved in key client relationships, a role he has been playing for the last six months," Gupta said.
The tier-I players in the USD 100 billion Indian IT-BPO industry agree that there are early signs of pickup in technology spending but they maintain a cautious outlook.
"The sentiments are positive. What is important is to put money behind those sentiments. We think that the budgets are likely to remain flat. HCL's sentiments are bullish," he said.
According to research firm Gartner, spending on IT services will grow 5.2 per cent to USD 927 billion in 2013, compared with growth of 1.8 per cent in 2012.
"HCL Tech once again reported healthy set of results, beating our as well as market expectations on all fronts. With end-to-end IT capabilities and a strong client mining ability, it is clearly emerging as a front runner and outperforming many of its peers companies," Angel Broking Research Analyst (IT) Ankita Somani said.
During the quarter, HCL Technologies added 5,136 (gross) but lost 141 employees (on net basis), taking total headcount to 85,194 by December 31, 2012.
"I think you need to have a continuous focus on meritocracy and HCL has had that for some time...There are actions taken on people who are at the bottom of the performance distribution curves," company's Corporate VP and Global HR Head Prithvi Shergill said.
"Our performance cycle closes in July and October for different segments of workforce. So there are some employees who make decisions after that. But largely, its also because while utilisation continues to improve (more than 81 per cent), so we have been able to fulfil needs," Shergill added.
Europe, which accounts for 28.5 per cent of the revenues, grew 20.1 per cent, while that from Americas (56.9 per cent of revenues) grew 9.4 per cent.
Infosys, last week, beat expectations with its December quarter results and also raised dollar revenue guidance for the fiscal ending March 31, while country's largest software services firm TCS also beat forecasts and said it was very confident heading into the new year.
Wipro, which ranks third in the tally in terms of revenues, will reports its earnings tomorrow.
"In the October-December quarter, we grew 3.6 per cent quarter-on-quarter, our highest over the last 5 quarters...Our net margin has improved for five straight quarters to reach 15.4 per cent," Nayar said.
"All in all, this has been a quarter of great impetus which has placed HCL in a position of advantage for leveraging the changing market dynamics," he said.
The board has declared an interim dividend of Rs 2 per equity share of Rs 2 face value.
"The cash generation, backed by higher profitability and efficient working capital management, continued to be robust...This quarter, HCL completes 10 straight years of quarterly dividend pay-out," HCL Tech CFO Anil Chanana said.
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India's HCL Tech profit jumps, beats estimate
BANGALORE (Reuters) - HCL Technologies, India's fourth-largest software services provider, beat estimates with a 68.4 percent jump in quarterly profit, joining Infosys and Tata Consultancy Services in signalling a pickup in outsourcing. Consolidated net profit for its fiscal second quarter that ended Dec. 31 rose to 9.65 billion rupees ($176 million) from 5.73 billion rupees a year earlier. Analysts were expecting profit to rise to 8.26 billion rupees, according to the latest Thomson Reuters data.
"Our growth this quarter was driven by Infrastructure and Financial Services, both growing in excess of 10 percent sequentially," new Chief Executive Anant Gupta said in a statement. That augurs well for outsourcing spending as financial clients are among the largest spenders globally on technology.
Infrastructure refers to managing large banks of computer servers, networks and the software they run on.
HCL Technologies, whose customers include Freescale Semiconductor and Finmeccanica, won six large contracts during the quarter, according to the statement. The company also added 2,118 employees in the three months to December.
Sales rose 19.6 percent to 62.74 billion rupees, just ahead of analysts' average estimate of 62.2 billion rupees.
Investors were hoping a strong showing by the top companies in India's $100 billion- a-year outsourcing industry would be an early sign of a broader pickup in outsourcing spending.
Research firm Gartner expects spending on IT services to grow 5.2 percent to $927 billion in 2013, compared with growth of 1.8 percent in 2012.
Economic uncertainty had led to concerns that clients in the United States and Europe, the IT industry's biggest markets, would continue to hold back spending. The World Bank on Tuesday cut its estimate for global economic growth in 2013 to 2.4 percent from its 3 percent estimate in June, citing slow recovery in developed countries.
Infosys, India's No. 2 software services provider, on Jan. 11 beat expectations for the December quarter and unexpectedly raised its dollar-terms revenue forecast for the fiscal year ending March 31. Tata Consultancy also beat forecasts, on Dec. 14, and said it was "very confident" heading into the new year. Third-ranked Wipro reports its earnings on Friday.