New Delhi: Posting a 50 percent jump in net profit for the July-September quarter, the country's fifth largest software exporter HCL Technologies on Tuesday expressed confidence that the ongoing October-December quarter will be one of the best for the sector in terms of the number of deals.
    
HCLT posted a 50 percent jump in net profit to Rs 496.7 crore for the first quarter ended September 30, 2011, compared to Rs 331.1 crore in the corresponding quarter last year.
    
Its revenues stood at Rs 4,651.3 crore during the reporting quarter, up 25.4 percent from Rs 3,708.1 crore in Q1, FY'11. HCLT follows a July-June fiscal year.
    
"We have doubled our quarterly revenues in just three years to record a billion dollar quarter despite the tough economic environment," HCLT Vice-Chairman and CEO Vineet Nayar said.
    
While maintaining a cautious outlook, the company said a number of deals are expected to come up for renewal and restructuring in the October-December quarter.
    
Citing a TPI report, Nayar said the total size of deals on offer in this quarter could be as large as USD 8 billion.
    
"Overall, IT budgets have been down for some time and the economic environment looks bleak. The activity is now around churn. Clients were unhappy and they are looking to change their vendors, which throws up more opportunities for companies like us," Nayar said.
    
He added that demand would be driven by companies in continental Europe, who are looking for vendor partners with a global presence.
    
"A lot of these companies in continental Europe had contracts with local players. With emerging geographies now becoming an important growth engine, these companies want to partner vendors who have a global presence," he said.
    
The deals are expected to be in the USD 100-500 million range, he added.
    
Shares of the company, however, reacted adversely to the results - which some marketmen labelled below market expectations -- and fell by 8.53 percent to Rs 401.35 apiece in late afternoon trade on the BSE.
    
"HCLT's results were marginally below estimates. Volume growth was in line with estimates. In constant currency terms, the growth in revenues was at 5.1 percent. Margins were slightly lower than our expectations. Margins were down Q-o-Q because of higher salary costs," Kotak Securities Head (Fundamental Research) Dipen Shah said.
    
Shares of peer TCS also slipped 8.06 percent to Rs 1,029.50 in late afternoon trade on the BSE.
    
Tata Consultancy Services, which announced its results after the bourses closed on Monday, said its net profit rose by 6.1 percent in the second quarter to Rs 2,301 crore from Rs 2,169.21 crore in the same period last year. On a sequential basis, the company's net profit dipped by 2.7 percent during the reporting quarter on account of wage hikes. Its net profit stood at Rs 510.5 crore in Q4, FY'11.
    
"As we had said earlier, there was a negative impact of about 300 bps because of wage hikes and other expenses. However, the impact was offset to a large extent through increased efficiency and currency (rupee appreciation)," HCLT CFO Anil Chanana said.
    
The company's cash and cash-equivalents stood at Rs 469.4 crore as of September 30, 2011.
    
"While the currency markets continue to be volatile, HCL follows a layered hedging programme to cover its foreign currency exposure," Chanana said.
    
The board has declared an interim dividend of Rs 4 per equity share of Rs 2 face value, which includes a 'one-time special milestone dividend' of Rs 2 per equity share of the company.
    
Under the programme, all employees who are on the company's rolls as of October 14, 2011, will receive a minimum amount equivalent to 5 shares and a maximum amount equivalent to 10 shares, based on the duration of their tenure at HCL.

The amount they will receive will be based on the closing price of the company's shares on the NSE on October 17.
    
The company has budgeted an amount of Rs 25 crore for this initiative, the statement said.
    
"This 'Milestone Share Programme' is a small token of appreciation of our employees, who are the reasons for all our success," Nayar said. In July-September, 2008, HCLT had registered quarterly revenues of USD 501 million.
    
During the quarter, HCLT suffered a forex loss of Rs 17.9 crore, compared to a forex loss of Rs 65.5 crore in the same period last year.
    
HCLT added 9,311 (gross) and 3,474 (net) employees during the reporting quarter, taking its total headcount to 80,520 as of September 30, 2011.
    
HCLT signed 12 transformational deals this quarter, including with EMI Group, Norfolk Southern and a leading life sciences organisation.
    
In terms of geography, the Americas contributed 55.8 percent to the company's revenues, while Europe's revenue contribution stood at 26.6 percent.

(Agencies)