* Dec-qtr profit 9.65 bln rupees versus street view of 8.26
* HCL won six large contracts during the quarter
* Financial services clients spent more, boosting revenue
* Wipro forecast to post 8 pct earnings growth Friday
By Harichandan Arakali
BANGALORE, Jan 17 India's No.4 software services
provider HCL Technologies Ltd joined Infosys and Tata
Consultancy in beating profit estimates, sending its shares up
as much as 7 percent and adding pressure on Wipro to
deliver strong results on Friday.
Investors are betting that a good showing by the top
companies in India's $100 billion-a-year outsourcing industry is
an early sign of a broader pickup in IT spending. Reflecting
that optimism, the country's IT services subindex has
surged more than 13 percent in almost a week.
HCL reported a 68.4 percent jump in net profit for the three
months ended December to 9.65 billion rupees ($176 million) from
a year earlier. Analysts were expecting profit to rise to 8.26
billion rupees, according to Thomson Reuters data.
The company, based outside Delhi, also posted a 3 percent
gain in the volume of IT services it provides compared with the
previous quarter even as it cut headcount while Infosys Ltd
and Tata Consultancy Services Ltd added
An increase in work being moved offshore also helped HCL
grow operating margins faster than larger rival Tata Consultancy
compared with the previous quarter, while margins at Infosys Ltd
"They've really exercised cost control, they've managed that
exceedingly well by keeping a strong control on recruitment.
Their infrastructure services business has seen margin expansion
and that's a good sign as well," said Bhavin Shah, CEO of
Infrastructure refers to managing large banks of computer
servers, networks and the software that powers them.
HIGHER REVENUE GUIDANCE
Shares of IT services providers have jumped since industry
No.2 Infosys topped earnings forecasts and unexpectedly raised
its revenue guidance, spurring hopes for a turnaround for the
battered company and an uptick in demand for the broader sector.
HCL said revenue both from infrastructure and financial
services grew 10 percent from the previous quarter. That augurs
well for outsourcing spending as financial clients are among the
largest spenders globally on technology.
Wipro, the No.3 player, is expected to post an 8 percent
rise in earnings for the December quarter, according to the
latest Thomson Reuters data.
Shares in Wipro rose more than 3 percent to 433 rupees on
Thursday, helped by UBS' upgrade to 'buy' from 'sell' and an
increase in its price target to 510 rupees from 340 rupees on
expectation that revenue momentum picked up in the December
quarter and client spending outlook is improving.
HCL, whose customers include Freescale Semiconductor
and Finmeccanica, won six large contracts during the
quarter. Sales rose 19.6 percent to 62.74 billion rupees, ahead
of analysts' average estimate of 62.2 billion rupees.
Economic uncertainty had led to concerns that clients in the
United States and Europe, the IT industry's biggest markets,
would continue to hold back spending.
Research firm Gartner now expects spending on IT services to
grow 5.2 percent to $927 billion in 2013, compared with 1.8
percent growth in 2012.