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India's HCL Tech profit beats view, shares hit 12-yr high

October 17, 2012

Stock brokers trade in a brokerage firm in Kolkata February 16, 2009. - Reuters (File Photo)

BANGALORE: HCL Technologies, India's fourth-largest software services provider, posted a 78 per cent jump in quarterly profit on large contract wins, beating expectations and sending its shares to their highest levels in more than 12 years.

Shares of the company, valued at about $7.9 billion, rose as much as 3.83 per cent to 606.9 rupees in early Mumbai trading, their highest since March 2000. The shares were up 1.8 per cent at 0507 GMT.

Consolidated net profit for the fiscal first quarter that ended September rose to 8.85 billion rupees ($167.9 million) from 4.97 billion rupees for the year-earlier period. Analysts were expecting profit to rise to 8 billion rupees, according to Thomson Reuters data.

"This is a time when clients are really looking to cut costs, especially in many areas of services that are becoming commoditised. The company's strategy is perfectly right for that," said Hardik Shah, an analyst with K R Choksey Shares and Securities in Mumbai. Shah has an "accumulate" rating on the stock.

HCL Technologies, whose customers include Freescale Semiconductor and Finmeccanica, won 12 multi-year, multi-million dollar orders during the quarter, according to a company statement.

India's $100 billion-a-year outsourcing industry, which gets nearly 75 per cent of its revenue from the United States and Europe, may grow exports 11-14 per cent in the current fiscal year that ends March 2013, according to the National Association of Software and Services Companies, or NASSCOM, an industry lobby.

HCL Technologies' September-quarter sales rose 11.1 per cent from the year earlier, in dollar terms.

Infosys, the No. 2 provider, forecast it will grow only 5 per cent this year, citing continued global economic uncertainty, which it said made clients less confident about spending.

HCL did not issue a full-year forecast. Top-ranked Tata Consultancy Services will report its results on Friday.