HCL Tech Full Of Robustness

HCL Technologies announced their Q4FY12 results earlier today in the wake of which the stock price of the firm shot up by 6.52 per cent. The results posted by HCL have been contrary to the performance of the Indian IT sector. Companies like Infosys and Wipro have been reporting sluggish growth figures and pessimistic guidance. On reviewing the underperformance of the industry, the industry body NASSCOM revised the industry guidance to 11-14 per cent for FY13 in June 2012. Regardless of the stunted growth seen by industry majors due to cuts in IT spending, delayed decision-making and overall growth concerns, HCL Tech has managed to outperform and display robustness on all fronts.

The revenue of HCL Tech, in dollar terms, has sequentially increased by 3.05 per cent, reaching USD 1.08 billion in Q4FY12. The bottomline of the company saw even better growth with the EBIT increasing from USD 0.164 billion in Q3FY12 to USD 0.21 billion in Q4FY12, registering 28.05 per cent growth. The net profit of the company grew by 28.93 per cent from USD 0.121 billion in Q3FY12 to USD 0.156 billion in Q4FY12.

Since this quarter marked the end of the financial year for HCL Tech, the results also included annual figures, which didn’t fail to impress investors’ as well. In FY12, the company’s revenue increased by 17.12 per cent, reaching USD 4.152 billion. The management said that USD 2 billion had been procured from the new business that the company had incubated. The net income of the company increased by a whopping 30.95 per cent to 0.495 million in FY12 from USD 0.378 billion in FY11.

The depreciation of rupee helped improve margins for HCL Tech in rupee terms, thus amounting to revenue growth of 31.17 per cent YoY. The revenue mix in terms of geography, service offering and verticals remained quite the same. The company saw strong growth in the Americas and in Europe, being largely unaffected by the prevailing severe conditions. The company also announced a dividend of Rs 4 per share, which maintains its consistency in paying quarterly dividends.

The trend for HCL Tech though has been very similar to the trend followed by mid-cap IT companies, which is of robust growth figures accompanied by tremendous appreciation in stock prices for the fiscal. The YTD returns for HCL Tech’s stock currently stands at 32.39 per cent. Even the PE for the company is relatively higher than its peers at 29.68. Thus, with high growth prospects intact, caution and a close watch need to be maintained while investing in the company’s stocks.