Business

HCL Technology profit rises 4%, beats Street

BENGALURU :

HCL Technologies Ltd on Thursday reported a net profit of ₹3,265 crore in the September quarter, up 3.9% and beating Bloomberg consensus estimates of ₹3,196.50 crore.

Revenue for the September quarter was up 11.1% from the year-ago period to ₹20,655 crore, on the back of a strong performance by its digital business or ‘Mode 2’, which grew 36.3% year-on-year (y-o-y) in constant currency. Consensus Bloomberg estimates pegged revenue at ₹20,982.70 crore.

The Noida-based IT services company retained its FY22 guidance of double-digit growth in constant currency on the back of a positive demand environment and robust deal pipeline. It only provides a directional revenue guidance. It also retained its Ebit margin guidance in the range of 19-21%. Ebit stands for earnings before interest and taxes.

The dollar revenue for the second quarter grew 3.5% sequentially in constant currency to $2.8 billion, boosted by new deal wins and acceleration in clients’ digital agenda. It signed 14 new large deals worth $2.3 billion in the September quarter across the telecom, life sciences and healthcare, and manufacturing verticals.

In comparison, HCL’s closest competitor Wipro Ltd’s dollar revenue grew 8.1% sequentially in constant currency to $2.58 billion surpassing the $10-billion milestone of annualized revenue run rate.

“We have delivered a healthy performance this quarter marked by strong growth across our services portfolio led by our digital business, engineering, and cloud services. We had impressive client additions across all categories, reflecting strong demand and relevance of our offerings across all our client groups… Our robust pipeline and continued strong employee ramp up augurs well for our business momentum,” said C. Vijayakumar, chief executive officer and managing director, HCL Technologies.

The Ebit margin for the September quarter narrowed to 19% from 19.6% in the preceding quarter because of a drop in products and platforms revenue.

Analysts believe HCL has continued its growth momentum on expected levels. “HCL has a strong vertical focus and offerings around retail, healthcare, and oil and gas. Clients engaging with HCL leverage its capabilities to drive experience and outcome. HCL’s focus on client-specific requirements and DevOps capability are differentiating factors for outsourcing deals. However, HCL will need to drive faster changes to switch quickly to improve its digital revenue growth,” said D.D. Mishra, senior research director, Gartner.

The attrition rate for the second quarter increased to 15.7% from 11.8% sequentially, indicating a strong demand for technology professionals in the industry. The high attrition rate is expected to continue until about the fourth quarter when it is likely to taper down, according to Apparao V.V, chief human resources officer, HCL Technologies.

The company declared its earnings after market hours on Thursday. Ahead of its results, the shares were down 1.17% to close at ₹1,250.90 on the BSE.

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