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HCL Technologies beats gloom with 72.6% quarterly net rise

The country's fourth largest software services firm HCL Technologies on Wednesday posted better-than- expected performance with 72.6 per cent jump in quarterly profit, driven by strong growth in infrastructure services.

HCL Technologies' net profit zoomed to Rs 1,039.9 crore for the third quarter ended 31 March 2013, from Rs 602.5 crore in the January-March quarter of 2012. It follows July-June fiscal year.

The company's performance is encouraging for the sector in view of that fact that IT bellwether Infosys reported just over 3 per cent growth in its net profit.

HCL Tech's revenues stood at Rs 6,424.6 crore during the reported quarter, up 23.2 per cent from Rs 5,215.6 crore in the same quarter last year.

'Amidst a challenging and uncertain business environment, HCLT continues on its growth trajectory fuelled by its alternative outsourcing (AO) approach, led by two unique value propositions of alternative aSM and enterprise function as a service (EFaaS),' HCL Technologies president and CEO Anant Gupta told reporters.

During the quarter, the company added 37 new customers, including one $100 million client. HCLT has won over $1 billion in large multi-year deals and over 90 per cent of them were from rebid market and more than 50 per cent are integrated deals.

Gupta said the deal pipeline is growing, and the first two quarters - July to December - of the 2013-14 fiscal are expected to be better.

'Strong set of results from HCL Tech shrug off any concerns regarding health of Indian IT industry which were raised because of weak performance by Infosys. We continue to be positive on the stock,' Angel Broking Research Analyst (IT and Telecom) Ankita Somani said.

Gupta said that while non-discretionary spending and the renewal market is still driving growth, clients are still cautious on discretionary spending. IT companies, which get 80 per cent of their revenues from US and Europe, have been cautious about the challenging business environment.

Gupta added that growth in margins has come from better realisation, efficiency and foreign exchange gains. Infosys had disappointed the market with its financial numbers as well as the forecast of 6-10 per cent growth in revenue in 2013-14, less than the 12-14 per cent estimated for the industry by Nasscom.

HCLT's staff strength was reduced by 791 people during the quarter, as it continued to lose people for second consecutive quarter. The total employee count stood at 84,403 as on 31 March 2013 from 85,194 on 31 December 2012.

Asked about the company not taking freshers on board, Gupta said: 'Its not only a HCLT problem, there is a fundamental shift in the IT industry...shift in the value propositions which corporations globally are looking at...so natural challenge that is going to come is a mix of talent required to deliver the services into the future.
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