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HCL Tech Q1 net profit falls 8.6%, misses estimates

Missing consensus estimates, IT major HCL Technologies on Tuesday posted an 8.6% fall in consolidated net profit at Rs 3,283 crore for the first quarter ended June 30, against Rs 3,593 crore posted in the previous quarter.Ahead of the results, the company’s share prices hit a 52-week-low, but closed 1.7% down on the NSE.

A consensus estimate of Bloomberg analysts were expecting the firm to post a net profit of Rs 3,320.15 crore for the quarter under review. However, the firm’s net profit on a year-on-year basis rose 2.4% to Rs 3,205 crore, HCL Technologies said in a statement. During the quarter under review, the company’s revenues rose 3.8% to Rs 23,464 crore on a quarter-on-quarter basis from Rs 22,597 crore recorded in the March quarter, and 16.9% rise fromRs 20,068 crore posted during the comparable year-ago quarter.

“As technology becomes central to lives and businesses, HCL is accelerating the digital transformation journeys of its clients. We continue to pursue our growth strategy with a sense of purpose and responsibility toward our stakeholders and communities,” Roshni Nadar Malhotra, chairperson at HCL Technologies, said. During the reporting quarter, the company’s Ebitda fell 1.5% to Rs 4,975 crore fromRs 5,053 crore posted in the March quarter and down 1.7% from Rs 5,062 crore posted in the year-ago quarter. The company’s board also approved a dividend ofRs 10 per share.

“We have started FY23 on a strong note with an overall growth of 2.7% q-o-q and 15.6% y-o-y in constant currency. Our services business continues to have robust growth momentum, growing at 2.3% q-o-q and 19.0% y-o-y in constant currency, driven by our digital engineering and digital application services with cloud adoption being a horizontal theme across all services and verticals,” HCL Technologies CEO and managing director C Vijayakumar said.

“Our new bookings grew 23.4% y-o-y supported by a good mix of large- and mid-sized deals and our pipeline remains near record high. Our operating margin came in at 17%. We have put in place the right measures that will improve our profitability going forward,” he added.

HCL Tech added 6,023 freshers in Q1, while its total headcount stood at 210,966 as of June end. The company’s attrition rate rose to 23.8% as of June quarter on the last-12-month basis, a rise from 21.9% in the March quarter and 11.8% in same quarter of last year.

For Q1, the total contract value (TCV) of new deal wins stood at $2.05 billion, recording a 23.4% y-o-y growth, of which services’ TCV stood at $1.95 billion, enabled by seven net new large deal wins.The stock has lost about 30% of its value so far in 2022, compared with 7.5% fall clocked by the Nifty50.

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