HCL Technologies recorded a 12% drop in net profit sequentially for the March quarter, missing street estimates as cross-currency movements impacted earnings adversely. The IT major’s net profit during the period stood at Rs 1,683 crore, while it also disappointed on revenue growth which remained flat sequentially.
HCL Technologies, which follows the July to June fiscal year, posted March quarter revenue of Rs 9,267 crore as compared to Rs 9,283 crore in the preceding quarter. On an annual basis, the net profit grew by 3.6% and revenues rose by 11%. Shares of HCL Technologies fell 3.48% to close at Rs 891.05 apiece on the BSE on Tuesday.
HCL Technologies CEO Anant Gupta said, “This quarter saw our revenue increase by 14.4% LTM YoY in constant currency and we gained significant market share fuelled by transformational deal bookings in excess of $1 billion.”
The company also signed 14 deals during this quarter adding up to more than $1 billion of total contract value. HCL Technologies said its focus on enterprise digitalisation, industrial internet of things and next-gen ITO further fuelled the growth in this quarter. In US dollar terms too, the net profit of HCL Technologies for the quarter was down 12% on a sequential basis to reach $270 million while revenue growth remained flat at $1,491 million. On a constant currency basis, the revenue grew 2.7% sequentially.
The operating profit margin or EBITDA for the quarter stood at $336 million declining by 9.8% on a sequential basis. HCL Technologies CFO Anil Chanana said, “The operating margin metrics and enhanced working capital requirements have impacted our cash flows and are an outcome of our focused investment agenda for enhancing capability build up and delivery dynamics of large engagements.”
Commenting on the results, Greyhound Research CEO & Chief Analyst Sanchit Vir Gogia said, it was disappointing to see a flattish growth in revenue and decline in net profit but on positive note the company has been making clear moves from its heavy reliance on infrastructure managed services (IMS) business and focus more on the application services business.
“This will be a welcomed breather for investors that have been critical of HCL’s overt reliance on IMS business that attracts smaller margins compared to application services portfolio,” he added.
According to HCL Technologies CEO, the company is expanding its global footprint by opening new onsite facilities, co-innovation labs besides expansion in India. “The hiring of 100+ senior industry leaders over the last two quarters will facilitate exponential advantage in key emerging growth areas like enterprise digitalisation and engineering services.” he added.
HCL Technologies closed the quarter with a headcount of 1,04,184 with a net addition of 3944. The attrition rate in IT services services stood at 16.2% as against 16.4% in the preceding quarter.
In terms of revenue growth for the quarter on a constant currency basis, Americas which accounts for 57.5% of the topline remained flat while Europe grew by 4.4%. Among the verticals, public services recorded the highest growth at 11.9% followed by manufacturing at 3.6%.