ADVERTISEMENT

HCL Tech quarterly profit expected to dip 14% at Rs 736 crore

HCL Tech, India's fourth largest software services exporter, is likely to report nearly 14 per cent quarter-on-quarter dip in net profit for the July to September quarter on Wednesday. Profit is likely to be hit on account of wage hikes and forex losses related to hedging and translational losses.

A brokers' poll conducted by NDTV Profit estimates net profit to decline to Rs 736 crore against Rs 854 crore.

Sales are seen to rise nearly 4 per cent sequentially to Rs 6,152 crore against Rs 5,919 crore in the June quarter on the back of strong order backlog. Dollar revenues are expected to rise 4 per cent at $1123 million against $1080 million in the June quarter.

Volumes are estimated to grow at 3.1 per cent for the quarter, but the key trend to watch would be pricing. HCL Tech, like other big IT firms, has been reporting flat to negative pricing over the last four quarters.

Earnings before interest, tax, depreciation and amortization (ebitda) margins, a key measure of profitability, are expected to decline 220 basis points to 19.8 per cent from 22 per cent in the June quarter on account of wage hikes. HCL Tech had announced offshore wage hike of 8 per cent and onsite wage hike of 2 per cent, effective July 1, 2012.

HCL Tech's forex loss is expected to come down to Rs 35 crore against Rs 58 crore in the June quarter.

Shares in the company closed 0.14 per cent higher at Rs 584.25 on the BSE on Tuesday, outperforming the broader BSE IT index, which declined 0.14 per cent. Over the quarter since July 17, 2012, HCL Tech shares have surged nearly 22 per cent against 9 per cent gains on the BSE IT index.
 
HCL and bigger rival Infosys are part of India's $100 billion information technology and back-office services sector earning the bulk of their revenues from customers in the United States and Europe.