 "C Vijayakumar, CEO & MD, HCLTech")
Information technology (IT) services major HCLTech has revised its full-year 2023-24 (FY24) revenue guidance to 5-6 per cent year-on-year (Y-o-Y) growth in constant currency terms due to weak performance in the first half of the year. This is down from the earlier estimate of 6-8 per cent and a growth of 13.7 per cent in 2022-23.
HCLTech reported on Thursday a net profit of Rs 3,833 crore for second quarter (Q2) of FY24, a 9 per cent increase from Rs 3,487 crore in the same period last year.
The consolidated revenue from operations reached Rs 26,672 crore, an 8 per cent Y-o-Y increase. Bloomberg had estimated the revenue to be at Rs 26,945 crore and a net profit of Rs 3,756 crore.
The company reported net new bookings in the quarter at an all-time high of $3.96 billion in total contract value (TCV). This includes a large deal worth $2.1 billion signed with the telecommunication major Verizon Business in August. The firm’s deal wins have consistently been close to $2 billion in TCV for the past eight quarters, with the exception of $1.6 billion in the first quarter (Q1) of FY24.
Sequentially, profit after tax grew by 8.5 per cent, while revenue increased by 1.4 per cent.
The quarter ending on September 30 is traditionally a strong growth period of the year for IT services companies. For FY24, the company expects its revenue growth, excluding revenue addition from the recently acquired ASAP Group, to remain between 4 per cent and 5 percent.
“Looking ahead, we expect very healthy sequential organic growth in our services business. This growth, in normal times, would be considered extremely good, as it includes a seasonally weak third quarter in the services business. However, for the entire year — combined with a weak Q1, which we reported last quarter, and a strong Q2 that we are reporting — our organic growth for services will add up to 4.5-5.5 per cent in FY24,” said C Vijayakumar,
chief executive officer and managing director of HCLTech.
The company had missed expectations in the April-June quarter with net profits declining by 11.3 per cent sequentially due to a significant reduction in discretionary spending in multiple verticals. In Q2, financial services and manufacturing verticals led the growth, with a Y-o-Y increase of 12.5 per cent and 9.5 per cent, respectively.
Earnings before interest and taxes margins of HCLTech improved by 150 basis points to 18.5 per cent from 17 per cent in Q1FY24.
“The margin improvement is primarily due to driving efficiencies in our managed services engagements through automation and artificial intelligence operations capabilities. We also significantly reduced our dependence on subcontractors, using our own employees to replace them. We also controlled some of the discretionary spending,” Vijayakumar said. The total headcount of the company has decreased for a second consecutive quarter, with a net reduction of 2,299 employees from the workforce.
In Q1, the headcount had declined by around 2,500. The attrition rate has reduced from 2.1 per cent quarter-on-quarter to 14.2 per cent, the lowest for the company since Q1 of 2021-22.
The company has announced a dividend of Rs 12 per share, an increase from the company’s general trend of paying Rs 10 in dividends per quarter.
