HCLTech’s profit drops to Rs 3,986 crore, or 8.4%

HCL Technologies reported an 8.4% decrease in consolidated net profit for the fourth quarter that concluded in March on Friday, totaling Rs 3,986 crore. This was far less than the Rs 4,123 crore street predictions.

 

For the quarter that ended in December, the nation’s third-largest provider of IT services reported a net profit of Rs 4,350 crore.

The net profit of the corporation remained constant from year to year. It had made Rs 3,983 crore in profit the previous year.

In a post-earnings call, CEO and MD C Vijayakumar said that the business anticipates revenue growth (on a constant currency basis) of about 3-5% for FY25, with services revenue growing by 3-5% and an EBIT margin of 18–19% on a year-over-year basis.

The board of HCLTech also announced an interim dividend for FY25 of Rs 18 per share.

“Despite geopolitical and global economic obstacles, HCLTech continues to expand because to a distinct portfolio. As we expand our community projects outside of India, we are more focused than ever on doing business ethically and sustainably,” chairman Roshni Nadar Malhotra said.

In comparison to the previous quarter, HCLTech’s revenue remained same at Rs 28,499 crore, although it increased 7.1% year over year from Rs 26,606 crore recorded in the same period previous year. Its Ebitda decreased to Rs 6,117 crore, or around 10%.

The IT major’s EBITDA and sales both failed to meet street estimates. Analysts at Bloomberg predicted in their consensus estimate that the business will have sales of Rs 28,557 crore and EBITda of Rs 6,364 crore.

The company’s segment for technology and services had a 1.1% quarterly decline and an 8.7% year-over-year decline. Its public services, which include transportation, energy and utilities, travel, and logistics, decreased 6.3% on a quarter-over-quarter basis and 7% on an annual basis.

“HCLTech’s strong commitment to our clients and people has allowed us to lead the industry in FY24 with good dollar revenue growth of 5.4% y-o-y during difficult times.” More significantly, with our operational cash flow up 21.6% year over year to $2,711 million and free cash flow up 27.7% year over year to $2,584 million, we have turned this increase into even greater value creation for our shareholders, Vijayakumar said.

“Despite Q4 profits falling short of projections, the firm has a robust business pipeline and a bright future ahead of it. Reduced expenditure and lengthier client decision-making processes are the causes of contract signing delays, according to Gartner senior principal analyst Biswajit Maity.

As of the March quarter, HCLTech had 227,481 total employees, including 3,096 new hires and a net increase of 2,725 workers. Its attrition rate decreased to 12.4% from 19.5% at the same time last year.

It’s important to highlight that, in order to keep up the pace, HCLTech has to regularly monitor and handle customer feedback that indicates dissatisfaction with the quality of their services. On the personnel front, HCLTech has handled attrition issues rather well, Maity said, while other suppliers are now having difficulty.

Deal prevails
HCLTech secured 21 new big transactions in Q4 with a total contract value of $2,290 million (eight in software and thirteen in services). The business secured 73 new significant sales in FY24, accounting for 36 services and 37 software deals, bringing its total deal wins up 10% to $9,759 million.