July 29 (Reuters) – Software services firm HCL Technologies (HCLT.BO) said on Thursday its quarterly net income rose marginally as demand for outsourcing increased, sending its shares up by as much as 4 percent.
Net income rose 3.7 percent to 3.42 billion rupees for April-June quarter, while sales increased 18 percent to 34.25 billion rupees.
Indian software companies are benefitting from a pickup in after services spending in the U.S., the largest market for the sector, after the global economic downturn.
“With hedge losses almost behind us we would see further improvement in cash flows and continued strengthening of the balance sheet,” Anil Chanana, CFO, said in a statement.
HCL’s larger rival India’s NO. 1 IT firm Tata Consultancy Services (TCS.BO) and third-largest Wipro (WIPR.BO) earlier reported street-topping performances, while No. 2 Infosys (INFY.BO) posted a surprise fall in quarterly profit.
HCL’s net income increased 6.9 percent on year to $73.6 million and revenue rose 21.5 percent to $737.6 million under US accounting norms. The EBITDA margin fell to 18.6 percent in the June-quarter from 22.1 percent a year ago.
US contributed 58.9 percent, Europe 28.5 percent and Asia Pacific 12.6 percent to HCL’s revenue in the June quarter.
Europe, which has been a cause of concern for most exporters in India and is the second-biggest market for the $60 billion Indian outsourcing sector after the United States, grew 4 percent over the March-quarter in terms of revenue for HCL.
Research firm Forrester said in a report this month that Europe’s volatile economic situation and uncertainty about corporate IT budgets would result in possible delays or cancellations of some outsourcing projects.
Custom application (industry solution) and Enterprise application services contributed together more than half of HCL’s revenue in the June quarter.
HCL, among India’s top five software services firm, added 6,428 employees in the June quarter taking its total headcount to 64,557, it said in a statement.
Rising outsourcing demand has seen Indian IT firms boosting hiring and raising staff salaries as they battle intensifying competition from global rivals such as IBM (IBM.N) and Accenture (ACN.N).
HCL’s net debt came down to $36 million as on June ’10 from $221 million a year ago.
At 9.51 local time, shares in HCL Technologies (HCLT.BO), which the market values at about $5.5 billion, were trading up 4.08 percent at 388 rupees in a flat Mumbai market.
(Reporting by Sanjeev Choudhary; Editing by Ramya Venugopal)
((firstname.lastname@example.org; +91 11 4178 1016; Reuters Messaging: email@example.com))
((If you have a query or comment on this story, send an email to firstname.lastname@example.org)) Keywords: HCL TECH/
(C) Reuters 2010. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nSGE66R0DZ