HCL Tech 2QFY16 Flash
Growth disparity across geos & verticals; in-line revenue & margin
HCL Tech (HCLT) posted in-line revenue growth and margin performance with revenue at US$1,566mn (RSec est. US$1,564mn), 1.4% qoq with 2.1% cc growth. Growth was led by infrastructure services (3.4% cc growth) and business services (8% cc growth). Geo trends were mixed for HCLT with Americas growing 5.5% qoq and Europe/RoW declining by 2.4%/3.4%, respectively. Among services, growth was skewed with retail & CPG and public services growth at 10.3%/8.4% respectively while manufacturing declined 1.3% qoq on cc basis. We note the decline in engineering and R&D services which has been driving growth in the recent quarters. Operating performance was in-line with EBIT% at 20% (RSec est. 19.8%), +65bp qoq. PAT was higher at Rs19.19bn on lower tax rate and higher other income than estimated.
Con-call details: 19th Jan (Tue); 4.30PM; +91-22-3938 1023
Exhibit: Quarterly Results Snapshot
(Rs mn)
2QFY16
1QFY16
% qoq
2QFY15
% yoy
2QFY16E
Var (%)
Revenue (US$mn)
1,566
1,545
1.4
1,491
5.1
1,564
0
Revenue
103,410
100,970
2.4
92,830
11.4
103,244
0
EBIT
20,720
19,572
5.9
22,100
(6.2)
20,441
1
EBIT margin (%) (Reported)
20.0
19.4
23.8
19.8
EBIT margin (%) (Adjusted for one-time provision)
20.0
19.4
23.8
19.8
PAT (Reported)
19,190
17,262
11.2
19,160
0.2
17,589
9
PAT (Adj. for one-time provision)
19,190
18,230
5.3
19,160
0.2
17,589
9
EPS (Rs)
13.6
12.3
11.2
13.6
0.0
12.5
9
Quarterly Performance (consolidated)
(Rs mn)
2QFY16
1QFY16
% qoq
2QFY15
% yoy
Software service revenue (US$mn)
924
921
0.3
905
2.1
Infrastructure services revenue (US$mn)
555
542
2.4
513
8.4
BPO revenue (US$mn)
87
81
6.9
73
19.0
Revenue (US$mn)
1,566
1,545
1.4
1,491
5.1
Revenue
103,410
100,970
2.4
92,830
11.4
Direct Cost
67,680
67,418
0.4
58,490
15.7
Gross Profit
35,730
33,552
6.5
34,340
4.0
SG&A
13,480
12,630
6.7
11,150
20.9
Total Exp
81,160
80,048
1.4
69,640
16.5
EBITDA
22,250
20,922
6.3
23,190
(4.1)
Depreciation & Amortisation
1,530
1,350
13.3
1,090
40.4
EBIT
20,720
19,572
5.9
22,100
(6.2)
Other income
3,550
2,410
47.3
2,160
PBT
24,270
21,982
10.4
24,260
0.0
Tax
5,080
4,720
7.6
5,100
(0.4)
APAT (reported)
19,190
17,262
11.2
19,160
0.2
APAT (Adj. for one-time provision)
19,190
18,230
5.3
19,160
0.2
EPS Rs.
13.6
12.3
11.2
13.6
0.0
Gross margin (%)
34.6
33.2
37.0
EBITDA margin (%)
21.5
20.7
25.0
EBIT margin (%) (Reported)
20.0
19.4
23.8
EBIT margin (%) (Adj. for one-time)
20.0
20.6
23.8
APAT margin (%)
18.6
17.1
20.6
Revenue-growth by segment (qoq % in constant currency)
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
Geography
Americas
4.0
3.4
0.4
1.3
5.7
6.0
0.2
5.1
0.7
5.5
Europe
1.0
5.0
4.8
6.5
2.7
7.2
4.4
0.1
5.6
(2.4)
RoW
8.5
(3.2)
10.4
0.1
(6.4)
4.3
10.6
(0.1)
(8.4)
(3.4)
Services
Application services
NA
NA
NA
NA
NA
NA
NA
1.4
0.1
2.0
Engineering and R&D Services
1.5
2.0
0.1
3.7
8.1
12.6
4.6
1.9
3.6
(1.5)
Infrastructure Services
8.8
4.8
5.0
3.1
3.6
6.2
3.1
5.2
0.9
3.4
BPO Services
1.7
11.7
(1.3)
16.8
1.1
4.5
7.9
4.0
2.4
8.0
Verticals
Financial Services
6.9
2.1
6.4
8.2
3.0
1.6
2.3
2.1
1.9
1.9
Manufacturing
5.4
4.4
2.1
(2.4)
5.3
7.3
3.6
1.1
0.5
(1.3)
Lifescience & Healthcare
6.5
(4.3)
-
0.8
(1.7)
19.3
2.4
10.2
4.3
0.3
Energy-Utilities-Public Sector
3.1
20.8
14.0
1.9
(5.6)
7.9
11.9
(4.0)
4.9
8.4
Retail & CPG
(1.0)
6.0
2.7
2.4
15.8
8.6
(10.5)
7.1
1.4
10.3
Telecom, Media & Entertainment
(6.7)
0.1
(2.7)
9.5
0.3
2.0
10.0
9.6
1.0
3.4
HCLT
3.6
3.0
2.9
2.8
3.2
6.2
2.7
2.9
1.2
2.1
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