/ciol/media/agency_attachments/c0E28gS06GM3VmrXNw5G.png)
Follow UsBy Sumeet Chatterjee
BANGALORE: India's HCL Technologies Ltd. is on track to exceed its revenue and profit growth forecast of 30-40 percent for its fiscal year ending June, a senior official said on Wednesday.
HCL, India's fifth-largest software services exporter, is focusing on Europe and Asia-Pacific where the software services business is growing faster than in the United States, its biggest market now, President Vineet Nayar told Reuters in an interview.
"We have put huge emphasis on growing (business in) Europe, which is growing almost at 70 percent year-on-year, and Australia-New Zealand which is growing at 83 percent," he said.
The firm, which gets more than half its revenue from the United States, wants to expand operations in other regions because of a possible U.S. slowdown.
"If you combine the U.S. slowdown threat and the dollar depreciation, it is quite apparent that somewhere down the line U.S. is not going to be as attractive a destination as it used to be five years ago," he said.
HCL shares ended 7.2 percent higher at 323.70 rupees in a Mumbai market that rose 0.5 percent.
The company had reported a 72 percent jump in quarterly profit on Tuesday as it won new outsourcing contracts.
HCL got 30 percent of its revenue from Europe in the March quarter up from 26 percent a year ago. It plans to set up a new development centre in Europe, details of which will be announced in six weeks, Nayar said.
"HCL is in a better position to deliver higher growth now than ever before. Incremental growth will come from Europe and Asia-Pacific," said Sanjeev Hota, IT analyst with Emkay Share and Stock Brokers.
CLSA Asia Pacific Markets on Wednesday raised its rating on HCL stock to an 'outperform' on consistent performance in the past three quarters, from a two-year 'underperform'.
ACQUISITION BOOST
HCL is also eyeing acquisitions in the United States as well as Europe, Nayar said. The company is looking for potential targets in financial services, telecom, and life sciences and healthcare industrial segments.
"We need acquisitions to create new service lines, new value propositions which doesn't exist today and that is what we are focused on today," he said.
Nayar said the company, based on the outskirts of New Delhi, was getting large-sized outsourcing contracts and new clients were coming in at about 10 percent higher than the average billing rates.
"We had given a guidance of 30-40 percent revenue growth and 30-40 percent profit growth ... we will meet and beat all those guidances," he said.
Nayar said a stronger rupee was a concern for the company, but it had hedged $900 million at the end of the March quarter, up from $515 million in the December quarter, to cushion its impact on margins.
The rupee hit a nine-year high on Tuesday at 41.62 against the dollar. The currency, which has gained about 12 percent since it hit a three-year low in July, came off to 42 on Wednesday.
"I think it's a concern for everybody, the way the rupee is rising. But if you are in a global business then these are the things that you have to take in your stride," Nayar said.
Analysts say a 1 percent rise in the value of the rupee against the dollar shaves 0.3 to 0.5 percentage points from operating margins of software services firms.