HCLTech reports net profit growth of 7.6% YoY

HCLTech, the third largest IT services firm in the country, released its June quarter results on Wednesday. In Q1FY24, the company reported a revenue of ₹26,296 crore, up by 12.1% year-on-year (YoY), but declined 1.2% sequentially. In constant currency (CC) terms, the company’s revenue grew 6.3% YoY. The company’s net profit grew 7.6% YoY at ₹3,534 crore.  

HCLTech chief executive officer (CEO) C Vijayakumar said that while Q1 is typically a soft quarter for HCLTech with productivity benefits for a large number of contracts kicking in during the quarter, the performance has been “lower than our own expectations”.

During Q4FY23, HCLTech issued 6-8% revenue growth guidance for FY24 and operating margins to be in the 18-19% range. The company has retained both the CC revenue growth and operating margins.

Further, HCLTech won 18 large deals and reported a total contract value of $1.57 billion.

“We experienced a double-digit YoY growth, in our largest verticals – financial services, manufacturing, and life sciences and healthcare fueled by large deals. These large deals helped offset cuts in client discretionary spend in these verticals. We are expecting other verticals to pick up shortly,” said CEO Vijayakumar.

In terms of headcount, the IT major's total workforce stood at 223,438 as of June 30, down by 2,506; however, the company added 1,597 freshers. The company also reported LTM attrition at 16.3%, declined by 7.5% percentage points YoY. HCLTech deferred the annual pay reviews of employees by a quarter.

The company reiterated its focus on artificial intelligence (AI), more particularly on generative AI. HCLTech is reported to have more than 70 projects in the pipeline in different stages from proof of concept to implementation. The projects cover domains such as education, applications, system and product engineering, infrastructure and operations, and HCLSoftware products. The company is also training more than 20,000 employees on generative AI capabilities. HCLTech has launched generative AI labs in three locations globally.

Additionally, the company spokesperson said that it is focusing on other emerging technologies including 5G, quantum computing, and low-code platforms.

The company chairman Roshni Nadar Malhotra said in a statement that the company is well-placed to leverage opportunities in emerging technology areas ‘despite challenging global macro environment’.

“India’s third largest IT services firm, HCL Technologies Ltd., reported a subdued performance, missing street estimates due to the weak demand environment which the IT sector as a whole is facing due to recession fear across the globe,” said Dhruv Mudaraddi, research analyst, Stoxbox. He added that the large deals wins are a positive takeaway.