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1 Copyright © 2016 HCL Technologies Limited | www.hcltech.comHCL Technologies Confidential

FINANCIAL PERFORMANCE UPDATEANIL CHANANA


SAFE HARBOR STATEMENT

Certain statements in this presentation are forward-looking statements, which involve a number of risks, uncertainties, assumptions and

other factors that could cause actual results to differ materially from those in such forward-looking statements. All statements, other than

statements of historical fact are statements that could be deemed forward looking statements, including but not limited to the

statements containing the words 'planned', 'expects', 'believes', 'strategy', 'opportunity', 'anticipates', 'hopes' or other similar words. The

risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding impact of pending

regulatory proceedings, fluctuations in earnings, our ability to manage growth, intense competition in IT services, Business Process

Outsourcing and consulting services including those factors which may affect our cost advantage, wage increases in India, customer

acceptances of our services, products and fee structures, our ability to attract and retain highly skilled professionals, our ability to

integrate acquired assets in a cost effective and timely manner, time and cost overruns on fixed-price, fixed-time frame contracts, client

concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key

focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, the

success of our brand development efforts, liability for damages on our service contracts, the success of the companies / entities in which

we have made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital

or acquiring companies outside India, and unauthorized use of our intellectual property, other risks, uncertainties and general economic

conditions affecting our industry. There can be no assurance that the forward looking statements made herein will prove to be accurate,

and issuance of such forward looking statements should not be regarded as a representation by the Company, or any other person, that

the objective and plans of the Company will be achieved. All forward looking statements made herein are based on information presently

available to the management of the Company and the Company does not undertake to update any forward-looking statement that may

be made from time to time by or on behalf of the Company.


All the figures are on LTM basis for period ending June 30th, for the respective years

FINANCIAL HIGHLIGHTS


4,1524,686

5,3605,952

6,389

2012 2013 2014 2015 2016

Revenue

REVENUE GROWTHINDUSTRY LEADING REVENUE GROWTH

• Revenue and Headcount 5 year CAGR at 12% and 7% respectively, demonstrative of non-linearity at play.

• Non Linearity has resulted in best in class Revenue /Employee at USD 59K (for LTM Jun 30th ‘16).

• On the back of investments, HCL’s strategic play across digitalization, IoT, Next–Gen ITO and ESO expands

addressable market beyond traditional IT and positions the company to capture both business and

technology spending.

In m

nU

S$


662925

1,292 1,324 1,290

2012 2013 2014 2015 2016

EBIT

EBIT AND NET INCOMEHEALTHY PROFIT MARGIN

• EBIT 5 year CAGR at 22%.

• The company posted EBIT growth of 40% in both 2013 and 2014. Post 2014, the growth in EBIT

moderated, led by enhanced investment agenda.

• A well defined layered hedging policy has ensured effective management of currency risks.

• Best in class EPS (in INR) growth, clocking 5 Year CAGR at 35%.

In m

nU

S$

481732

1,0371,164 1,145

2012 2013 2014 2015 2016

Net Income

In m

nU

S$


HEALTHY PROFIT TO CASH CONVERSION5 YEAR AVERAGE OCF/ NI AT 99% | FCF/ EBITDA AT 60%

• Robust Profit to cash conversion.

• Net cash stands at US$ 1.8bn as on 30th Jun’16.

106%114%

105%

84%96%

43%

70% 69%56% 56%

2012 2013 2014 2015 2016

OCF/NI FCF/ EBITDA


RESILIENT BUSINESS MODEL


1,880

827 643195

2,538 2,346

1,184

321

Application Services Infrastructure Services Engineering and R&D Services Business Services

Jun-11 Jun-16

TREND IN CHANGE IN SERVICE MIXDYNAMIC SERVICE MIX IN LINE WITH CHANGING TECHNOLOGY LANDSCAPE

• Global leadership in IMS and Engineering.

• IMS - Next Gen ITO deals are driven by automation; hybrid cloud and integrated services delivery. Differentiated positioning as end

to end outsourcing provider. Strong referenceability and credentials backed by impeccable execution track record.

• ERS – Global and domestic leadership position driven by experience in SW engineering, product development , embedded and

mechanical across diversified verticals. Capability and trust main drivers for stickiness in customer relationships. Strategic

outsourcing, IoT and Platform engineering are driving ERS pipeline.

• Applications – Strong vertical focus accompanied with thrust on Integrated propositions in ITO space and Modern Apps and Digital in

the transformational space. Application modernization is expected to be a significant opportunity with increased adoption of cloud

based solutions. Market dynamics getting reshaped with SAAS and cloud formats.

53% 40%MIX 23% 37% 18% 19% 6% 5%

In m

nU

S$


9051,156

290 263 303 424

1,605

2,057

787 694 599 612

Financial Services Manufacturing Lifesciences &Healthcare

Public Services Retail & CPG Telecommunications,Media, Publishing &

Entertainment

Jun-11 Jun-16

VERTICAL MIXPUBLIC SERVICES AND LIFESCIENCES & HEALTHCARE GROWTH MOMENTUM REFLECTIVE OF FOCUSED INVESTMENTS

• Momentum verticals have gained critical mass and demonstrated growth in last 5 years.

• Growth is notable in momentum verticals like Public Services (that includes Oil & Gas, Energy & Utilities, Travel-

Transport – Logistics & Government) and Life sciences and Healthcare on back of investments in differentiated

propositions.

• Matured verticals like Manufacturing and Financial Services have demonstrated healthy traction.

26% 25%MIX

In m

nU

S$

33% 32% 8% 12% 7% 11% 9% 9% 12% 10%

Reclassification of Telecom vertical revenue effected in 2013 is incorporated into the prior year figures


1,980953

451 162

3,867

1,939

466 116

Americas Europe ROW (Ex. India) India

Jun-11 Jun-16

GEO MIXGROWTH DRIVEN BY DEVELOPED MARKETS OF AMERICAS AND EUROPE

• Growth driven primarily by developed markets of Americas and Europe.

• New markets like Nordics, Benelux , DACH opened and penetrated in continental Europe.

• Select market strategies pursued in ROW. ANZ and South Africa showing increased

traction.

• Indian market being focused only for select verticals.

In m

nU

S$

56% 61%MIX 27% 30% 13% 7% 5% 2%


48%52% 56% 56% 58%

2012 2013 2014 2015 2016

Managed Services / FPP %

CONTRACT TYPES AND CLIENT BUCKETSSUPERIOR EXECUTION LEADING TO TRACTION ACROSS CUSTOMER BUCKETS

Progressive shift towards Managed services/ Fixed

Price contracts -

• Driven by focus on large multi year ITO/ IMS Deals

• Reflective of superior execution

• Also an effective margin lever

• Healthy addition of clients across all buckets

• Focus on full service portfolio leading to deeper

client penetration

• 96% of the business from existing clients

reflective of strong renewals

Client Category

Nu

mb

er

of

Clie

nts

$100+ Mn

$50+ Mn

$20+ Mn

$5+ Mn

$1+ Mn

2012 2014 2016

1520

10

6780

45

187237

164

429482

397

657

in %


SHAREHOLDER VALUE CREATION


050

100150200250300350400450

30-Jun-11 30-Jun-12 30-Jun-13 30-Jun-14 30-Jun-15 30-Jun-16

RELATIVE STOCK PRICE MOVEMENT

HCL Nifty - IT Nifty - 50

1729

4551 54

2012 2013 2014 2015 2016

EPS in INR

EPS AND STOCK PERFORMANCEBEST IN CLASS SHAREHOLDER RETURNS

• Company has focused on providing attractive shareholder return over the years.

• HCL has posted superior 5 years EPS CAGR at 35%.

• Dividend payout currently at 49% (for LTM June 30th 16) up from 32% in Jun’11.

• Rewarded shareholders with two bonus issue and one stock split in last 10 years.

• Robust ROE at 28% (as on 30th June ’16).

• HCL stock (up by 3.0x) has significantly outperformed broader market (up by 1.5x) and IT sector index

(up by 1.7x).

In IN

R

3.0 x

1.7 x

1.5 x


INVESTMENTS


ENHANCING GLOBAL PRESENCE THROUGH STRATEGIC INVESTMENTS

15

4

3x

31

11

3.5x

16

6

2.4x

3*

1

2.6x

NO. OF GDC

COUNTRIES PRESENT

CAPACITY EXPANSION IN LAST 5 YEARS

AMERICAS EUROPE RoWINDIA

(CAMPUS)

* 2 MORE CAMPUS LOCATIONS ARE IN PROGRESS TO BE OPERATIONAL IN 2016-17.


INVESTMENTS IN ACQUISITIONS

End–to–end engineering and research capabilities across hardware, software, mechanical &

manufacturing engineering and PLM consultingGeometric Ltd

Gained technical prowess in System-on-Chip & Physical design to further extend leadership

position in the semiconductor industryC2SiS

Enterprise workplace transformation services and end-user cloud engineering solutions for

virtualized workplace environment P2P

Consulting services & solutions for Microsoft Account with deep expertise in core engineering,

IoT, embedded systems and Intelligent SystemsTrygstad

Volvo’s external IT business added 40 new customers from the Nordics and France to HCL’s

portfolio and market leading mainframe and iSeries capability to HCLVolvo

HCL now possesses one of the largest Microsoft Dynamics practices in North America allowing

it to better capture growing opportunities in the CRM services marketPower Objects

Well thought out Acquisition Strategy to address white spacesMomentum in last 18 months


VALUE CREATION THROUGH INVESTMENT IN IP LED DEALS

Investments in IPs and Platforms are at the core of our

M&A Strategy

Deal with one of the largest global tech companies• Partnership involving investment and revenue share

for products operating in the IT Operations Management and Application development spaces

• Opportunity to create own IP based solution around the products

Deal with CSC:Core banking JV in which CSC contributed core

banking, cards, payments and default management industry software and product development expertise

Deal with Geometric:HCL will inherit several Geometric Intellectual Properties in PLM and digital manufacturing as part of the deal

Deal with CA:Revenue share deal where HCL took over the entire

Threat Management Product Suite of Computer Associates & development team worldwide (the

partnership has since been concluded).

Deal with Nomor:HCL gained a LTE Protocol Stack – to

service Apple, Samsung, NSN, Ericsson,Thales, L3, and Harris

Deal with Moogsoft:To address service assurance modernization market for Cloud, SDI and IoT; and to add more autonomics, machine learning, and self-healing capabilities.

Representative Engagements


CORPORATE GOVERNANCE


CORPORATE GOVERNANCETENETS & PHILOSOPHY

FRAMEWORK FOR CODE OF BUSINESS

Insider Trading Code

Whistle Blower Policy

Code of Business Ethics and Conduct

Policy Against Sexual Harassment

Investors Satisfaction Survey

Anti-Bribery & Anti Corruption Policy

Fair Disclosure Code

INDEPENDENT DIRECTORS TOTAL

1 3

STAKEHOLDERSRELATIONSHIP

4 4

AUDIT

4 4

RISKMANAGEMENT

3 5

FINANCE

2 4

NOMINATION &REMUNERATION

1 3

CSR

1 2

ESOPALLOTMENT

1 3

DIVERSITY

BOARD COMMITTEESPLAY A CRUCIAL ROLE IN GOVERNANCE STRUCTURE

BOARD OF DIRECTORS

GLOBAL & VALUE DRIVEN

11 DIRECTORS: INDEPENDENT: 8; EXECUTIVE: 1;

NON EXECUTIVE – NON INDEPENDENT – 2; WOMEN DIRECTORS - 3

CORPORATE OFFICERS: 16

FAIRNESS& EQUITY

COMPLIANCE &ACCOUNTABILITY

TRUST &TRANSPARENCY

COMMITMENT TO VALUESAND INTEGRITY

STRONG CORPORATE GOVERNANCE FRAMEWORK


BOARD OF DIRECTORSSTRONG FOCUS ON CORPORATE GOVERNANCE

Mr. Shiv Nadar, Chairman and Chief Strategy Officer: Founder of HCL and recipient of Padma Bhushan award. Through Shiv Nadar Foundation, Mr. Nadar has beenactively associated with numerous philanthropic initiatives with prime focus on education. Holds iconic global status in IT Thought Leadership

Mr. R. Srinivasan: An electrical engineer and an MBA from IIM-A. Founderand now Vice Chairman of Redington (India) Limited, a leading Tech productsupply chain solution company.

Mr. S. Madhavan: C.A and MBA IIM-A, Retired as a senior Partner and ExecutiveDirector, PWC. Long standing leader of indirect practice at PWC.

Mr. Amal Ganguli: A Fellow member of the ICAI and ICA, England & Wales.Previously Chairman and Senior Partner at PWC, India. His range of workincludes tax advice, audits, corporate M&A and consulting.

Mr. Sosale Shankara Sastry: B.Tech from IIT, Bombay. Dean of Engineering atUniversity of California, Berkeley. Previously, Member, Scientific Advisory Boards forGovernment of Singapore and Thailand.

Ms. Robin Abrams: B.A and juris doctor degree from U.S. Previously interimCEO at Zilog and senior VP at 3 Com. Held various senior managementpositions including Apple computers and Unisys. Served several U.S. publiccompany Boards and several academic advisory committees.

Mr. Keki Mistry: Vice Chairman & CEO of HDFC Ltd. He is a CA from the Institute ofChartered Accountants of India (ICAI). Mr. Keki is also on the Board of several HDFCgroup companies including HDFC Bank and on board of other companies like SunPharmaceutical Industries Ltd and Torrent Power.

Mr. Thomas Sieber: He is a senior international leader with more than 20years of experience in the ICT-sector. Thomas is also Member of Board ofDirectors at IT-services provider Garaio AG; Sierra Wireless (NASDAQ: SWIR),Global leader in “Internet of Things”, as well as Danish wireless solutioncompany RTX (NASDAQ OMX Copenhagen A/S). Thomas is also Chairman ofthe Board of Directors at Axpo Holding AG, one of two national Energyproviders in Switzerland. He holds masters in business administration fromthe University of St.Gallen, Switzerland.

Ms. Nishi Vasudeva: Ms. Vasudeva was the Chairperson & Managing Director,Hindustan Petroleum Corporation Limited (HPCL), a fortune 500 oil and natural gascompany. She has held leadership positions in Marketing, Corporate Strategy, Planningand Information Systems and led key business transformation and organizationalrestructuring projects. She received the SCOPE Award for excellence and outstandingcontribution to Public Sector Management from the Hon’ble President of India. Sheholds a Bachelor`s Degree in Economics Honors from Delhi University and MBA fromIndian Institute of Management, Calcutta.

Ms. Roshni Nadar Malhotra: She is CEO and Executive Director of HCLCorporation. Roshni holds MBA degree from Kellogg Graduate School ofManagement. She has played an institutional building role in the Shiv NadarFoundation and the SSN Institutions in Chennai as well as the Shiv NadarUniversity in NCR and the Vidyagyan Schools.

Mr. Sudhindar Krishan Khanna: Bachelor In Economics and C.A. Presently, Chairmanand MD of IEP Mumbai, a leading PE Fund. Founding member of Accenture worldwide.Serves on the board of United Spirits, Peninsula Holdings and Canara HSBC Insurance.


FY’17 OUTLOOK


FY’17 GUIDANCESTRENGTH IN ORDER BOOK AND PIPELINE LEADING TO BUSINESS VISIBILITY

FY’17 Revenues are expected to grow between 12.0% to 14.0%* in Constant Currency

FY’17 expected Operating Margin (EBIT) range is from 19.5% to 20.5%

*Revenue Guidance is based on FY’16 (April to March) average exchange rates.

The above constant currency guidance translates to 11.2% - 13.2% in USD terms based on June 30th 2016 rates.


THANK YOU

financial performance update - hcl technologies › sites › default › files › 13... ·...

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