HCLTech Q2 Results: FY24 Guidance Cut Even As Profit Surges Nearly 9%
HCLTech's Q2 net profit rose 8.6% sequentially to Rs 3,833 crore on the back of revenue that increased 1.40% to Rs 26,672 crore.
HCL Technologies Ltd. trimmed its revenue growth guidance for the current fiscal despite blockbuster dealmaking, underscoring the “slower for longer” growth pangs for the Indian IT services industry.
Revenue of India's third largest IT services company rose 1.4% over the previous three months to Rs 26,672 crore in the quarter ended September, according to an exchange filing on Thursday. That compares with the Rs 29,645-crore consensus estimate of analysts tracked by Bloomberg.
HCLTech Q2 FY24 Earnings Highlights (QoQ)
Revenue up 1.4% at Rs 26,672 crore vs Rs 26,296 crore (Bloomberg estimate: Rs 29,645 crore).
EBIT up 10.83% at Rs 4,919 crore vs Rs 4,438 crore (Bloomberg estimate: Rs 4,749 crore).
EBIT margin at 18.44% vs 16.9% (Bloomberg estimate: 17.62%).
Net profit up 8.6% at Rs 3,833 crore vs Rs 3,531 crore (Bloomberg estimate: Rs 3,756 crore).
Interim dividend of Rs 12 per share declared.
In dollar terms, HCLTech’s revenue rose 0.8% sequentially to $3,225 million in the July-September quarter. It was up 1% in constant currency terms. The Noida-based IT company now expects to grow at 5-6% in FY24 as against 6–8% estimated earlier. Operational profitability is seen at 18-19%.
The company, however, wasn’t found lagging in terms of dealmaking. In fact, at $4 billion and 16 new clients, HCLTech’s new deal wins were at an all-time high in the second quarter.
“Our new bookings… are at an all-time high, driven by a standout mega deal,” HCLTech’s Chief Executive Officer C Vijayakumar said in a statement. “This achievement underscores out ability to seize exceptional opportunities in the market and gives us optimism for our medium-term growth prospects.”
But the blockbuster dealmaking isn’t reflecting meaningfully in the company’s top-line, as discretionary spending has dried up. The $250-billion Indian IT services industry is bracing for a slowdown as enterprises in the U.S. and beyond cut back on technology to cope with high interest rates and inflation. Russia’s prolonged war in Ukraine has exacerbated business activity across the pond.
Still, Vijayakumar expects the company to clock strong sequential growth of 3-4% in the third and fourth quarters of the fiscal, on the back of the $2-billion Verizon deal that kicks in on Nov. 1.
People Power
HCLTech’s overall headcount declined by 2,299 in July-September, even as the attrition rate on a trailing 12-month basis eased to 14.9% from 16.3% in April-June. The total headcount stood at 2,21,139, as on Sept. 30.
The company, which onboarded 3,630 freshers in the September quarter, now plans to hire up to 10,000 fresh graduates by the end of the fiscal. “Our campus hiring process is going according to plan, and we are looking to hire 10,000 freshers by the end of FY24,” Ramachandran Sundararajan, chief people officer at HCLTech, said during a virtual press conference.
The IT firm has skipped salary hikes for mid-level and senior employees for the full year and deferred it for the rest by one quarter.
On Thursday, HCLTech shares fell 1.74% to Rs 1,224.05 apiece on the BSE even as the benchmark Sensex ended the day 0.10% lower at 66,408.39 points. The quarterly results were declared after market hours.
