HCL Technologies (HCLTECH) Q4 04/05 earnings summary

Executive summary

• FY ended June 30, 2005: standalone service revenue rose 28% YoY to Rs. 1,447.01 crore, while PAT was nearly flat at Rs. 329.27 crore; consolidated revenue increased to Rs. 3,471.23 crore, with PAT at Rs. 618.72 crore.

• Higher service volumes and headcount drove growth, but intense competition kept bill rates nearly unchanged; lower other income weighed on standalone profit growth.

Financial highlights

• Standalone service revenue Rs. 1,447.01 crore vs Rs. 1,127.98 crore; PBT Rs. 338.93 crore vs Rs. 339.53 crore; PAT Rs. 329.27 crore vs Rs. 325.72 crore.

• Standalone cost of software development rose 30% to Rs. 789.51 crore; employee costs increased 35% to Rs. 491 crore, while administration and other expenses fell to 23% of service revenue from 24%.

• Consolidated Indian GAAP revenue Rs. 3,471.23 crore vs Rs. 3,040.20 crore; PBT Rs. 715.51 crore vs Rs. 801.52 crore; net profit Rs. 618.72 crore vs Rs. 686.23 crore.

• Standalone other income declined to Rs. 83.02 crore from Rs. 146.76 crore; it included Rs. 36.9 crore of unrealized capital gains on growth-fund investments at year-end.

Outlook and guidance

• Indian IT services and IT-enabled services demand remained strong, supported by growing global outsourcing; favorable volumes were offset by pricing pressure from competition.

• Europe, Australasia, Singapore and Malaysia contributed 23% of standalone revenue; their share was expected to rise in coming years as geographic diversification continued.

• Billable headcount reached 12,563 at June 30, 2005, up from 8,137 a year earlier; continued training and development supported workforce capabilities.