HCL Technologies Q2 Results: IT firm HCL Technologies posted its fiscal second quarter earnings with profit at Rs 3,832 crore, up 9.8 per cent in comparison to Rs 3,489 crore during the same period last year, surpassing estimates. The growth in profit was driven by a robust deal momentum even as larger macroeconomic weakness persisted in the IT sector. It posted revenue from operations at Rs 26,672 crore, up 8 per cent as against Rs 24,686 crore during the second quarter of FY23. According to a poll by CNBC TV18, HCL Tech was expected to post Q2FY24 profit at Rs 3,760 crore and revenue at Rs 26,821 crore.
“I am pleased to share that we continue to execute well in a challenging business environment. We are also expanding our global sustainability agenda with the launch of HOLTech Grant Americas to combat climate change,” said Roshni Nadar Malhotra, Chairperson, HCL Tech.
“Our revenue growth of 1 per cent QoQ and 3.4 per cent YoY on a constant currency basis, with a 154 bps QoQ improvement in operating margin and improving cash flows, reflect our ability to execute well in an evolving business environment and our commitment to operational efficiency,” said C Vijaykumar, CEO and Managing Director, HCL Tech.
While the total income during the quarter was at Rs 27,037 crore, total expenses incurred by HCL Tech during the period was at Rs 21,909 crore.
“Q2 FY24 growth at 8 per cent YoY (in INR) is accompanied with sharp uptick in margins and deal wins, as well as great cash generation. EBIT margins increased to 18.5 per cent, an increase of 50 bps YoY, 154 bps QoQ. Profit After Tax (PAT) came in at 14.4 per cent, an increase of 30 bps YoY. EBIT was up 11.5 per cent YoY and PAT was up 9.8 per cent YoY. Last Twelve Months (LTM) ROIC for the company stood at 32.2 per cent (up 350 bps YoY) and 39.4 per cent (up 320 bps YoY) for services business. Cash generation accelerated with LTM OCF US$ 2,820 Mn (151 per cent of PAT) and FCF at US$ 2,662 Mn (142 per cent of PAT),” said Prateek Aggarwal, Chief Financial Officer, HCL Tech.
The company revised its FY24 revenue guidance in constant currency terms to 5-6 per cent YoY. Previously it was 6-8 per cent. It, however, maintained its EBIT guidance at 18-19 per cent for the fiscal year.
The Board of Directors also declared an interim dividend of Rs 12 per equity share of Rs 2 each of the company for the Financial Year 2023-24. “The record date of October 20, 2023 fixed for the payment of the aforesaid interim dividend has been confirmed by the Board of Directors. The payment date of the said interim dividend shall be October 31, 2023,” the company said in a regulatory filing.
HCL Tech’s performance across business verticals
HCL Technologies’ IT & Business services posted a revenue of Rs 19,898 crore during the quarter ended September 2023. Its Engineering and R&D services recorded a revenue of Rs 4,271 crore during Q2FY24. The HCL software vertical posted a revenue at Rs 2,632 crore.
HCL Tech’s deal wins
The IT major’s TCV new deal wins during Q2FY24 stood at $3,936 million. The firm won 16 large deals, with 10 in the services segment and six in the software segment. “Our new bookings of $4bn this quarter is at an all-time high, driven by a standout mega deal. This achievement underscores our ability to seize exceptional opportunities in the market and gives us optimism for our medium-term growth prospects,” said C Vijaykumar.
HCL Tech’s attrition rate
HCL Tech reported a decline in its attrition rate to 14.2 per cent in Q2FY24 from 16.3 per cent in the previous quarter. The attrition rate excludes involuntary attrition and digital process operations. The total headcount at HCL Tech as on September 30, 2023, was at 221,139, posting a fall by 2,299, as the company is focussing on improving utilisation rates to maintain operating margin guidance amidst a tough business environment. The freshers’ addition for the quarter stood at 3,630, up from last quarter’s 1,597.
Further, Ramachandran Sundararajan, Chief People Officer, HCLTech, said, “We will be going with pay revision from October onwards. Mid- and senior management won’t take pay hikes in FY24. 90 per cent of the workforce will be eligible for pay hike revision.”