HCL Technologies reported a marginal rise in its June-quarter net income as demand for outsourcing increased, but margins took a hit from foreign exchange losses.The software services firm said on Thursday its quarterly net income rose 3.7 percent to 3.42 billion rupees, while sales increased 18 percent to 34.25 billion rupees.It shares rose as much as 6 percent after the announcement as analysts such as Karvy Stockbroking's Harit Shah said it beat expectations.HCL Tech's hiring numbers and the deals the company has acquired recently translated into a good outlook for the firm, added Shah, who had forecast a profit 3.32 billion rupees.Indian software companies are benefitting from a pickup in services spending in the U.S., the largest market for the sector, after the global economic downturn.The firm's profits this quarter were also boosted after writing back a tax charge of $6.8 mln during the quarter.However, currency fluctuations hit operating margins which grew 0.1 percent during the June quarter. June-quarter forex losses stood at 1.37 billion rupees from 886 million a year ago."With hedge losses almost behind us we would see further improvement in cash flows and continued strengthening of the balance sheet," Anil Chanana, chief financial officer said.The firm added that it does not see a rise in prices of deals going forward but expressed concerns about its BPO business.HCL's BPO business will continue to make losses for the next 4-6 quarters because of investments being made and degrowing in that portfolio, Vineet Nayar, chief executive officer said.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 more than 28.5 percent and Asia Pacific 12.6 percent to HCL's revenue in the June quarter.EUROPEAN WOESEurope, 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."We can't say it will not impact us," Nayar said adding Europe, currency movements and retaining talent continue to be the key concerns for the firm going forward.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.However, he did see a positive side about the business in the coming months with companies and existing clients investing in the U.S. and emerging markets playing a bigger role.HCL, among India's top five software services firm, added 6,428 employees in the June quarter taking its total headcount to 64,557.Its net debt came down to $36 million as on June '10 from $221 million a year ago.At 2.10 p.m., local time, shares in HCL Technologies, which the market values at about $5.5 billion, were trading up 2.52 percent at 382.2 rupees in a flat Mumbai market.(Reporting by Sanjeev Choudhary; Writing by Nandita Bose; Editing by Ramya Venugopal)(For more business news on Reuters India click http://in.reuters.com)News posted by www.newsinfoline.com
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