HCL Technologies (HCLTECH) Q4 05/06 earnings summary

Executive summary

• FY06 results showed strong growth, but comparisons are distorted by the merger of six wholly owned subsidiaries, whose results are included for 15 months from April 1, 2005 to June 30, 2006.

• Standalone revenue excluding the merged subsidiaries was Rs 1,992.7 crore, up 38% YoY; reported standalone PAT rose 94% to Rs 638.4 crore.

• Consolidated net profit was Rs 690.7 crore; operations spanned IT services, BPO and networking services.

Financial highlights

• Standalone revenue was Rs 3,032.9 crore versus Rs 1,447.0 crore; excluding transferor companies, revenue was Rs 1,992.7 crore, up 38% YoY.

• Standalone PAT was Rs 638.4 crore versus Rs 329.3 crore; consolidated net profit was Rs 690.7 crore versus Rs 618.7 crore, with the consolidated comparison also affected by amalgamation adjustments.

• Consolidated sales were Rs 4,571.6 crore versus Rs 3,351.2 crore; the FY06 period included 15 months of transferor-company results.

• Standalone other income was Rs 83.3 crore, including Rs 75.3 crore profit on sale of investments; unrealized capital gains on growth funds were Rs 34.3 crore net of tax liability.

Outlook and guidance

• NASSCOM projected Indian software and services industry growth of 25–28% to US$36–38 billion in FY07; a NASSCOM-McKinsey forecast put industry revenue at US$60 billion by 2010.

• Europe, Australasia, Singapore and Malaysia contributed 36% of standalone FY06 revenue; their share was expected to rise in coming years.

• Offshore demand outlook was described as positive, supported by greater adoption of offshore development and maintenance; nearly US$100 billion of total contract value was due for renewal in 2006–07.