HCLTech Q4 net profit rises 11% to Rs 3,983 crore

Synopsis India’s third largest software exporter guided for 6-8% annual revenue growth in constant currency for FY24, which is half of the growth rate clocked in the current fiscal of 13. 7%. ETtech Net profit for the three months ended March stood at Rs 3,983 crore compared with Rs 3,594 crore a year back (Illustration: Rahul Awasthi) HCL Technologies reported a fiscal fourth-quarter net profit rise of 10.

8% but a sequential fall of 2. 8% and gave a tepid revenue forecast for FY24 amidst a challenging macro-environment in which customers cut discretionary spending. India’s third largest software exporter guided for 6-8% annual revenue growth in constant currency for FY24, which is half of the growth rate clocked in the current fiscal of 13.

7%. The FY23 revenue though was within its own guided range. HCLTech also guided for an 18-19% operating margin for FY24.

For the services business, which accounts of 73% of total revenue, the company guided for a 6. 5-8. 5% constant currency revenue growth in the ongoing fiscal.

This compares with a 15. 6% growth in the business for FY23, which missed its own guidance of 16-16. 5%.

Net profit for the three months ended March stood at Rs 3,983 crore compared with Rs 3,594 crore a year back. Revenue came in at Rs 22,606 crore, up 17. 7% year on-year but down 0.

4% sequentially. The average of an ET poll of analysts had pegged net profit at Rs 3,883 crore, up 8%, on revenue of Rs 26,710 crore, a rise of 18%. The board has declared an interim dividend of Rs 18 per equity share of Rs 2 in the current fiscal quarter.

For the full year, the company reported net profit of Rs 14,851 crore, up 10%, and revenue of Rs 101,456 crore, a rise of 18. 5%. Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories HCLTech chief executive C Vijayakumar said customers have reduced some of the discretionary spend looking at where they can take out costs and postpone programs.

He added that there was more demand in North America than in Europe. “While there has been some stress and uncertainties in the system, be it booking delays or ramp downs, it’s largely on the discretionary spend side. We do not see that much stress in a lot of run-the-business opportunities,” Vijayakumar said during the Q4 briefing.

“That gives us good confidence given our strength in both transformative spend and the operating spend. ” In a seasonally weak quarter for the company’s product business, operating margin for the January-March period stood at 18. 1%, down by 150 basis points on-quarter, due to lower discretionary spends by clients.

Full year operating margin stood at 18. 2%, against a company guidance of 18-18. 5%.

Chief financial officer Prateek Aggarwal said that some verticals saw a slowdown in growth in the second half of the fiscal year. He added that the company is seeing softness in technology (1. 6% down on-quarter) and telecom (down 5.

6% QoQ) verticals due to the cutback of discretionary spending and ramp down of projects. Manufacturing was also down 3. 5% over the quarter due to the closure of one project.

“We think most of the pain is behind us. But the environment across the board has been very volatile,” said Aggarwal. HCL Technologies reported a new deal total contract value (TCV) worth $2.

07 billion compared to $2. 34 billion last quarter and $2. 26 billion in Q4 of last fiscal.

Net new TCV for the full year stood at $8. 85 billion compared to $8. 3 billion last fiscal year.

The company reported signing 13 large deals during the quarter. However, the management said that the current environment was not conducive to price increases across projects. “There have been some instances where customers have asked for a reduction in price or expecting us to deliver the same outcome at a lower cost, which might give us some flexibility on how we can deliver the projects,” said Vijayakumar.

Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said that the company reported operating margin and net profit growth above estimates with revenue growth in line with estimates. He added that the guidance for FY24 was better than the brokerage’s expectation, considering Infosys guidance of 4-7% revenue growth, its slowest in six years. Last week, India’s top software exporters Tata Consultancy Services and Infosys underlined the “uncertain environment” and flagged a slowdown in decision making, while reporting weaker than expected results.

Talent outlook Attrition for the quarter stood at 19. 5% compared to 21. 7% reported last quarter.

HCLTech’s headcount in the fourth quarter stood at 225,944 with a net hiring of 3,674 over the previous quarter, said Ramachandran Sundararajan, chief people officer. Last quarter, the company had added 2,945 employees. The company added 26,734 freshers during the full year, missing targets of hiring 30,000 freshers during the fiscal year.

“But the good thing is we honoured all the offers that we made and we onboard everybody without having to make any delays and that’s baked into our plan,” said Sundararajan. Long-term outlook “Our aspiration is to get a 19-20% operating margin. This year given all the variables that play into the cost structures and the ramp ups etc, we believe it will be between 18-19%,” said Vijayakumar.

Aggarwal added discretionary give a larger margin headroom and the current mix of discretionary and run-the-business type of projects has been baked into the margin guidance. Don’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp. click here! Friday, 21 Apr, 2023 Experience Your Economic Times Newspaper, The Digital Way! Read Complete Print Edition » Front Page Pure Politics Economy ET Markets More RBI may Hold Rates Again in June; Monsoon, Crude Key Members of India’s rate-setting panel believe that cumulative hike since last May appears sufficient for tackling inflation, increasing the likelihood the Monetary Policy Committee (MPC) will hold rates where they currently are even in the June bi-monthly review.

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