HCL Technologies in focused on acquisition of Geometric

HCL Technologies is set to acquire Geometric's business. The company will acquire the entire business, except for 58 per cent stake that Geometric owns in joint venture 3DPLM Software Solutions with Dassault Systems. It will issue 15640546 equity shares valued at Rs 2 each.

HCL will buy Geometrics’ IT services in all stock deal with value of around Rs 1300 crore. The company is looking to strengthen its engineering and automotive services portfolio. The stock swap will happen as Geometric shareholders will receive 10 shares in HCL for every 43 shares in Geometric.

HCL’s acquisition is the largest acquisition in the engineering services space. The deal has surfaced at a time when Indian IT firms are looking at transiting away servicing deals to a higher margin digital business model. According to company’s management, the acquisition will provide several cross-sell and up-sell opportunities. The customers will benefit from a unique services portfolio of end-to-end engineering, R&D, digital technologies and internet of things capabilities.

On financial front, Geometric posted revenue of Rs 315 crore in Q3FY16, which is about 9 per cent growth on a yearly basis. The company’s EBITDA too rose by 62.85 per cent to Rs 56 crore in Q3FY16 as compared to same period in previous fiscal year. Its net profit was also boosted by 77.0 per cent to Rs 28.96 crore in Q3FY16 on a yearly basis.

The share price of HCL increased by 1.69 per cent on bourses in early trades; and is trading at Rs 828.5 on an intraday basis. The Geometric stock price also shot up by 18.27 per cent and is trading at Rs 229.85 on an intraday basis.

Geometric is one of India’s leading PLM consulting, mechanical engineering and manufacturing services providers. The company's segments are products, software services and engineering services.

HCL is a global technology company that operates in three segments viz. Software services; Information Technology (IT) Infrastructure services; and Business Process Outsourcing services. The company’s services include Business Services, Custom Application Services, Engineering and Research and Development (R&D) Services, Enterprise Application Services, Enterprise Transformation Services, IT Infrastructure Management Services and Outsourcing.