HCL Tech net zooms 50%, shares slide on Europe

HCL Technologies, India's fourth-largest IT services company, on Tuesday reported a 50% year-on-year increase in net profit at Rs 497 crore for the quarter ended September, driven by a surge in orders and a sharp drop in foreign exchange losses aided by a weaker rupee. HT reports Performance up, stock down

HCL Technologies, India's fourth-largest IT services company, on Tuesday reported a 50% year-on-year increase in net profit at Rs 497 crore for the quarter ended September, driven by a surge in orders and a sharp drop in foreign exchange losses aided by a weaker rupee.

But its shares slumped by 9% on fears over its future growth on a day that saw the stocks overwhelmed by negative sentiment linked to doubts over economic revival in Europe. HCL said it saw a "bleak" market environment.

The results came a day after rival Tata Consultancy Services reported a 6.1% rise in net profit. TCS shares slumped by 8 % while the benchmark Sensex fell 1.6%.

The Shiv Nadar-led, Noida-headquartered HCL Tech, which follows a July-to-June fiscal year, achieved "tremendous momentum" in revenue growth, said Vineet Nayar, chief executive.

Revenues surged 25.4% to Rs 4,651 crore during the quarter as the company reported all-round growth. It signed 12 deals and added 3,474 employees on a net basis during the quarter, taking its total headcount to 80,520.

HCL said revenues from Europe, where it acquired UK-based Axon in a big deal, crossed $1 billion in the last 12 months.

"HCL's margins" were slightly lower than our expectations," Dipen Shah, senior vice-president at Kotak Securities, told Reuters.