HCL Technologies (HCLTECH) Q4 03/04 earnings summary

Executive summary

• FY04 consolidated revenue rose 20% to Rs 2,563.69 crore; consolidated net income under Indian GAAP increased to Rs 686.23 crore from Rs 247.93 crore, including a substantial gain on the HCL Perot Systems stake sale.

• Standalone software-services revenue grew 29% to Rs 1,127.98 crore, while standalone PAT increased 4% to Rs 325.72 crore as higher employee and subcontracting costs pressured margins.

Financial highlights

• Consolidated Indian GAAP sales were Rs 2,563.69 crore vs Rs 2,143.50 crore; other income rose to Rs 476.51 crore from Rs 110.09 crore.

• Consolidated Indian GAAP net profit was Rs 686.23 crore vs Rs 247.93 crore; FY04 included a Rs 305.99 crore net gain on the HCL Perot Systems stake sale.

• Standalone service revenue reached Rs 1,127.98 crore vs Rs 871.73 crore; PAT was Rs 325.72 crore vs Rs 312.47 crore.

• Consolidated US GAAP net income was Rs 7,921 million vs Rs 2,712 million; after non-cash sales incentives, net income was Rs 7,914 million vs Rs 2,695 million.

Outlook and guidance

• Technology spending outlook was viewed as positive; growth opportunities were expected to improve with market conditions, while initiatives targeted stronger competitive positioning and broader practices.

• Europe and other non-US markets were targeted to reduce geographic concentration; their combined revenue contribution was 20% in FY04 and expected to increase in coming years.