HCL Technologies on Friday posted an 8.4% drop in consolidated net profit at Rs 3,986 crore in the fourth quarter ended March. This was much below the Street estimates of Rs 4,123 crore.
The country’s third-largest IT services firm had posted a net profit of Rs 4,350 crore for the quarter ended December.
On a year-on-year basis, the company’s net profit was flat. It had recorded Rs 3,983-crore profit during the year-ago period.
For FY25, the company expects revenue growth (on a constant currency basis) of about 3-5%, with services revenue rising by 3-5% and Ebit margin of 18-19% on a y-o-y basis, CEO and MD C Vijayakumar said in a post-earnings call.
HCLTech’s board also declared an interim dividend of Rs 18 a share for FY25.
“Led by a differentiated portfolio, HCLTech continues to grow despite global economic and geopolitical headwinds. Our focus on doing business sustainably and responsibly is sharper than ever as we scale our community initiatives beyond India,” chairperson Roshni Nadar Malhotra said.
HCLTech’s revenue was also flat at Rs 28,499 crore, compared with the sequential third quarter, while it rose 7.1% rise on a y-o-y basis from Rs 26,606 crore posted during the same quarter last year. Its Ebitda fell nearly 10% to Rs 6,117 crore.
The IT major’s revenue and Ebitda also fell below Street expectations. A consensus estimate by Bloomberg analysts expected the company to post revenue of Rs 28,557 crore and Ebitda of Rs 6,364 crore.
The company’s technology and services vertical registered a 1.1% fall on a quarter-on-quarter basis and 8.7% on a y-o-y basis. Its public services – including energy and utilities, travel, transport and logistics – fell 6.3% on a q-o-q basis and 7% on a y-o-y basis.
“HCLTech continues to lead the industry in FY24 with good dollar revenue growth of 5.4% y-o-y during challenging times through our strong commitment to our clients and our people. More importantly, we have translated this growth into even higher value creation for our shareholders with our operating cash flow at $2,711 million, up 21.6% y-o-y and free cash flow at $2,584 million, up 27.7% y-o-y,” Vijayakumar added.
“Despite Q4 results not meeting expectations, the company’s future looks promising with a strong business pipeline. Delays in deal signings are due to reduced spending and longer decision-making cycles among customers,” Biswajit Maity, senior principal analyst at Gartner said.
HCLTech’s total headcount stood at 227,481 as of March quarter, with a net addition of 2,725 employees and 3,096 freshers. Its attrition rate fell to 12.4% compared with 19.5% in the year-ago period.
“It’s important to note that some client feedback suggests dissatisfaction with HCLTech’s service quality, so they must actively monitor and address these concerns to maintain momentum. On the people front, while other providers are currently struggling to address attrition challenges, HCLTech has managed this very effectively,” Maity added.
Deal wins
HCLTech won new deal wins of total contract value of $2,290 million in Q4, with it bagging 21 new large deals (13 in services and eight in software). The company’s new deal wins rose 10% to $9,759 million in FY24, with it bagging 73 new large deals (with 36 in services and 37 in software).