HCL Tech Q3 Results: Revenue Up 8.1%, Profit Beats Estimates In Seasonally Weak Quarter

Revenue of India's third-largest IT services firm rose 8.1% sequentially to Rs 26,700 crore in the quarter ended Dec. 31.

<div class="paragraphs"><p>(Photo: HCL Tech/Facebook)</p></div>
(Photo: HCL Tech/Facebook)

HCL Technologies Ltd. grew in a seasonally weak quarter, even as the growth outlook for the outsourcing industry remained grim.

Revenue of India's third-largest IT services firm rose 8.1% sequentially to Rs 26,700 crore in the quarter ended December, according to an exchange filing on Thursday. That compares with the Rs 26,089-crore consensus estimate of analysts tracked by Bloomberg.

In dollar terms, the topline grew 5.3% quarter-on-quarter to $3,244 million. It was up 5% in constant currency terms.

HCL Technologies Q3 Results: Key Highlights (QoQ)

  • Revenue up 8.1% at Rs 26,700 crore (Estimate: Rs 26,089 crore)

  • EBIT up 18.09% at Rs 5,228 crore (Estimate: Rs 4,827 crore)

  • EBIT margin at 19.58% vs 17.93% (Estimate: 18.5%)

  • Net profit up 17.46% at Rs 4,096 crore (Estimate: Rs 3,814 crore)

The company has declared an interim dividend of Rs 10 per share.

The Noida-headquartered IT services firm, which recently tempered its FY23 growth guidance to the lower end of 13.5%-14.5% band, has once again revised the forecast to 13.5%-14% in constant currency terms. The EBIT margin guidance has narrowed to 18.0%-18.5%.

"We have delivered a strong performance this quarter across all key metrics," C Vijayakumar, chief executive at HCL Technologies, said in a statement. "Our strong revenue growth of 13.1% YoY CC is led by our services business which grew 15.4% YoY CC. Our margins at 19.6% this quarter, increased 60 BPS YoY."

HCL Technologies attributed its strong performance to deal wins in a seasonally weak quarter. The company won 17 large deals—seven in services and 10 in software. That translated to a total contract value of $2,347 million—up 10% over the year-ago period.

"During the quarter, we crossed important milestones of Rs 5,000 crore and Rs 4,000 crore for EBIT and PAT, respectively, for the very first time," Prateek Aggarwal, chief financial officer at HCL Tech, said. "Profitability was at an all-time high with EBIT at Rs 5,228 crore and PAT at Rs 4,096 crore."

Fewer people left the company in the December quarter. HCL Tech's attrition rate eased to 21.7% in Q3 from 23.8% in Q2. The company added a net 2,945 people to its staff, increasing the headcount to 2,22,270.

On Thursday, shares of HCL Technologies rose 1.62% to Rs 1,071.90 apiece on the BSE, even as the benchmark Sensex ended the day 0.25% lower at 59,958.03 points.