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HCL Tech Q3 Profit Rises 2.8 Percent, Constant Currency Revenue Up 5.6 Percent

HCL Technologies’ third quarter (October-December) profit grew by 2.8 percent sequentially to Rs 2,611 crore, beating analysts’ estimates.

Revenue in rupee terms increased 5.6 percent quarter-on-quarter to Rs 15,699 crore in the quarter ended December 2018, the company said.

Topline in dollar terms grew by 4.9 percent sequentially to $2,202 million while the same in constant currency increased 5.6 percent QoQ, which was far better than its competitors Infosys (4.2 percent), Wipro (2.4 percent) and TCS (1.8 percent).

The growth was driven by services across verticals and geographies led by Mode-2 services, Mode-3 and Mode-1.

The software firm said Mode 1 segment contributed 71 percent to revenue at $1,561 million (a sequential growth of 3.9 percent), Mode 2 at $377 million (up 13.1 percent) and Mode 3 at $263 million (up 6.2 percent QoQ).

HCL further said Mode 2 crosses $1.5 billion run rate. “The robust growth in Mode-2 services was fuelled by all the components that include digital & analytics, security, IoT and cloud-native services.”

Mode-1 growth was driven by IMS, ERS and applications, all of them demonstrating strong traction, it added.

HCL continued its strong deal win momentum, signing 17 transformational deals during the quarter, which are a mix of Mode 1 and Mode 2 services across all service lines. These deals were led by sectors such as financial services, technology & services and manufacturing.

“We once again set a new bookings’ record this quarter. We are entering 2019 with a healthy growth outlook backed by the strong relevance of our propositions in the market,” C Vijayakumar, President & CEO said.

HCL Tech has maintained its full-year constant currency revenue growth guidance at 9.5-11.5 percent and EBIT margin expansion forecast at 19.5-20.5 percent.

The company added 1 client in $100 million plus category, 5 in $20 million plus, 7 clients in $5 million-plus band and 22 clients in $1 million plus category while it lost 2 clients in $50 million-plus band and 1 in $10 million plus category QoQ.

At the operating level, EBIT (earnings before interest and tax) grew by 4 percent sequentially to Rs 3,086 crore in Q3, but margin contracted to 19.65 percent against 19.95 percent in the September quarter.

Through Mode 1 services, HCL delivers core services in areas of applications, infrastructure, engineering and R&D and business services.

As part of Mode 2, HCL delivers an experience-centric and outcome-oriented integrated offerings across digital & analytics, IoT WoRKS, Cloud Native Services and cybersecurity & GRC services.

HCL leverages its expertise in building software IP-led businesses over the last forty years to execute its Mode 3 strategy, in an evolving world of high automation and cloud platforms.―Money Control

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