HCL Technologies Q2 Results: Revenue Meets Estimate, FY23 Growth Guidance Raised

HCL Technologies’ revenue increased 5% sequentially to Rs 24,686 crore in the quarter ended September.

<div class="paragraphs"><p>(Source: Company's Facebook page)</p></div>
(Source: Company's Facebook page)

HCL Technologies Ltd.’s second-quarter revenue rose, aided by deal wins and digital spending.

The IT company’s revenue increased 5% sequentially to Rs 24,686 crore in the quarter ended September, according to its exchange filing. That compares with the Rs 24,513.4-crore consensus estimate of analysts tracked by Bloomberg.

Its revenue in dollar terms rose 1.9% over the preceding three months to $3,082 million.

Key Highlights Q2 FY23 (QoQ)

  • Net profit rose 6% to Rs 3,489 crore, against the Rs 3,415.1-crore forecast.

  • EBIT rose 11% to Rs 4,427 crore.

  • EBIT margin expanded to 18% from 17%.

  • Declared an interim dividend of Rs 10 apiece.

  • Attrition flat at 23.8% on the last 12-month basis.

The company also revised its FY23 guidance from that given at the end of the first quarter. It expects revenue growth for services in constant currency at 16–17% year-on-year.

"Revenue guidance at 16%-17% for services and 13.5%-14.5% at company level, reflective of our strong growth visibility," Prateek Aggarwal, chief financial officer, said. The company had guided for 12-14% growth (company level) in the first quarter.

It reduced margin forecast to 18–19% from 18-20% announced in the quarter ended June.

Business Environment

HCL Technologies won deals worth $2,384 million in the second quarter compared with $2,054 million in the previous three months. It won eight large service deals and three product deals from June to September.

"Our bookings and pipeline continue to be very strong, that augurs well for our future growth," C Vijayakumar, chief operating officer, said. "Concern of a recession is enabling more transformational deals. Clients preparing for slowdown are accelerating deals in the bid to be prepared. Pipeline remains robust," he added.

EBIT margin improved sequentially led by operating leverage and efficiencies, despite impact of salary increments for the largest section of the people, Aggarwal said.

The software company added net 8,359 new employees during the quarter, taking its total headcount to 2,19,325. The company has a target to hire 30,000-35,000 new employees in the current fiscal.

On moonlighting, Ramachandran Sundararajan, chief people officer, said the company doesn't approve "dual employment" as the employment contract requires exclusivity.

Shares of HCL Tech closed 1.4% higher before the results were announced on Wednesday compared with a 0.82% gain in the benchmark Nifty 50.