HCL records 23% rise in Profit

By agencies   |   Wednesday, 19 April 2006, 07:00 Hrs
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NEW DELHI: Indian software services firm HCL Technologies Ltd. reported a 23 percent rise in net profit for the third quarter to March, helped by large deals and a business transformation started a year ago.

However, the market showed disappointment at the results from the country's fifth largest software exporter, pulling the stock down nearly 5 percent at $14 in a firm Mumbai market.

“The year-on-year growth was much below expectations when compared to competes in the industry who are operating on a much larger base," said P Phani Sekhar, information technology analyst at Angel Broking. But Chairman and Chief Executive Officer Shiv Nadar said the company's growth was on track. “The billion dollar revenue rate is a clear outcome of the many large client-wins we have witnessed over the last few quarters," he said after releasing the results.

Under the U.S. Generally Accepted Accounting Principles, the company's net profit for the third quarter rose to $0.04 billion from $0.03 billion. The company's revenue grew 30.7 percent to $0.25 billion, exceeding the $250-million mark or $1 billion on an annualized basis.

Among the large deals the company signed during the year was the co-sourcing agreement with Britain's top electric retailer DSG International Plc. Nadar said the company expects its operating profit margins to remain stable during the current quarter till June.

In the third quarter, the margin in its mainstay software services business rose by 60 basis points to 22.3 percent, Vineet Nayar, president, said. The segment contributed $187.13 million to revenue, while business process outsourcing and infrastructure management services together brought in $64.38 million.

"The Q3 performance in the BPO space has been consistent with our projections," Ranjit Narasimhan, head of HCL's BPO operations said. He said the company hired 359 people during the quarter for new BPO contracts.

The company's revenue was boosted by the sale of its holdings in some venture capital funds, as part of a business transformation aimed at focusing on chosen service lines.

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