HCL Tech Q2 net profit up 18.5% at Rs 3,142 cr; revenue rises 6.1%

 

IT firm HCL Technologies on Friday posted 18.5 per cent rise in September quarter net profit at Rs 3,142 crore.

The IT major had registered a net profit of Rs 2,651 crore in the July-September 2019 quarter (as per US GAAP), HCL Technologies said in a regulatory filing.

Its revenue grew 6.1 per cent to Rs 18,594 crore in the quarter under review, from Rs 17,528 crore in the corresponding quarter last year.

On a sequential basis, net profit was 7.4 per cent higher from Rs 2,925 crore, while top line was higher by 4.2 per cent from Rs 17,841 crore in June 2020 quarter.

In the second quarter, HCL Technologies recorded revenue growth at 4.5 per cent quarter-on-quarter in constant currency - higher than its estimate of 1.5-2.5 per cent sequential rise.

HCL Technologies has maintained its revenue growth guidance of an average of 1.5-2.5 per cent increase quarter-on-quarter in constant currency for the third and fourth quarter.

"We have delivered a stellar Q2 performance with a sequential revenue growth of 4.5 per cent in constant currency and 21.6 per cent EBIT margin," HCL Technologies President and CEO C Vijayakumar said.

This growth momentum was driven by continued leadership in Digital Transformation and Cloud businesses and a strong stability in the Products and Platforms segment, all of which continue to open diverse growth avenues for the company, he added.

"Our investments over the last few years in next-gen technologies have held us in good stead during these difficult times and position us strongly to leverage the emerging market opportunities," Vijayakumar said.

The Board of Directors has declared an interim dividend of Rs 4 per equity share for the financial year 2020-21.

During the quarter, HCL signed 15 transformational deals. At the end of September 2020 quarter, HCL had 1,53,085 employees, while attrition for IT services (on a last 12 month basis) was at 12.2 per cent.

HCL Tech Q2 profit rises 18.5% to Rs 3,142 crore, outperforms projections

 

HCL Technologies posted a strong set of numbers as it outperformed the mid-quarter revenue growth update on account of performances driven by digital transformation and cloud businesses.

In the quarter ended Q2FY21, the company, on Friday, reported a net profit of Rs 3,142 crore, up 18.5 per cent year on year (YoY) and up 7.4 per cent on a sequential basis.

Dollar revenues stood at $2,507 million, a 4.5 per cent rise in constant currency terms over the previous quarter. This exceeded the 3.5 per cent quarter-on-quarter growth the Noida-headquartered company declared last month. The firm’s revenues grew 4.2 per cent YoY to Rs 18,594 crore during this period and 6.1 per cent sequentially. The operating margin of the IT services provider improved 110 basis points sequentially to 21.6 per cent in the July-September period—a 22-quarter high.

"This growth momentum was driven by our continued leadership in digital transformation and cloud businesses and strong stability in the products and platforms segment, all of which continue to open diverse growth avenues for us," said C Vijayakumar, president, and CEO, HCL Technologies. "Our investments over the last few years in next-gen technologies have held us in good stead during these difficult times and position us strongly to leverage the emerging market opportunities.”

The company stuck to its FY21 guidance of 1.5- 2.5 per cent growth in revenue for the remaining quarters while it upgraded the operating margin guidance to be between 20 per cent and 21 per cent for the ongoing financial year. This is a 50 basis point increase on both upper and lower limits.

The numbers were a tad higher than the street expectations. HSBC, in a brokerage report, expected the revenue to come in at Rs 18,510.9 crore, up 3.8 per cent QoQ and 5.6 per cent YoY. Net profit was pegged to grow 0.3 per cent QoQ and 10.5 per cent YoY at Rs 2,934.8 crore.

In Q2 FY21, HCL Technologies signed 15 transformational net new deals, led by key industry verticals including life sciences and healthcare, public services (energy & utilities), and manufacturing. The bookings have increased 35 per cent QoQ while pipeline grew 20 per cent, Vijaykumar added.

All the verticals registered a sequential growth in the second quarter. Like its most of its peers, life sciences was the vertical that led growth, up 8.6 per cent sequentially. Manufacturing and public services, despite the Covid-19 impact, showed a meagre 1.5 per cent and 0.2 per growth respectively. However, on a YoY basis, except life sciences, retail and CPG and Technology, other segments still witnessed a decline.

Attrition in the three months fell 240 basis points to 12.2 per cent when compared to the previous quarter. The headcount stood at 153,085, up 2,798 employees on a quarter-on-quarter basis.

The management said salary hikes will be rolled out with effect from October for select employees up to E3 levels (freshers to senior managers) and from January 2021 for the rest. "This is only a one-quarter lag from regular increment cycle we give regularly. It will be in the same range as given last year—the average hikes were 6 per cent for offshore and 2.5 per cent for onsite," said Apparao VV, chief human resource officer, HCL Technologies.

HCL Tech to hike workforce in Lucknow by 50% to 6,000 by March 2021

IT major HCL Technologies is looking to increase the workforce at its Lucknow facility by 50 per cent by the end of next financial year 2020-21.

From the current headcount of 4,000, the company plans to add 2,000 employees to cater its business expansion roadmap, HCL Technologies corporate vice president Sanjay Gupta told Business Standard here.

“In fact, our employee count is expected to hit 4,500 by the end of March 2020 from the current strength of 4,000 professionals,” he said, adding the Lucknow facility continued to grow fast and gain traction in the market. The employee count of HCL Lucknow stood at nearly 3,300 in March 2019.

“We are currently serving 103 global clients from the Lucknow centre, of which nearly 70 per cent are based in the US. More projects are in the pipeline,” he added.

HCL Lucknow is the largest HCL campus in North India and spread over 100 acres of land. It offers spectrum of services including infrastructure management, application development, product engineering, BPO and HCL internal enabling functions.

HCL Lucknow started its operations in Oct 2016 and it is part of HCL’s strategic vision to expand and create opportunities in smaller cities across India.

“The company has so far made investments to the tune of Rs 500 crore in HCL Lucknow and more funds would be invested as and when required,” Gupta said adding nearly 95 per cent of the employees hailed from Uttar Pradesh.

Besides, the company is also aiming at achieving gender diversity with almost 23 per cent of the current employees being women professionals.

He recalled that when the HCL Lucknow facility was being developed, skeptics were rather apprehensive if the venture could succeed in a non-metro city like Lucknow, yet the state’s human capital had contributed to its continues progress.

HCL Lucknow comprises Arya Bhatt Training Centre to train and cross train 500 individuals simultaneously. A second training centre with an additional capacity of training 500 people is also complete and expected to start functioning soon.

The Yogi Adityanath government in Uttar Pradesh is also keenly promoting the IT and new age sectors in the state, especially in the Eastern and Central regions for balanced growth beyond the National Capital Region (NCR) hubs of Noida and Greater Noida.

Meanwhile, the company has sponsored the 5th Edition of ‘HCL Lucknow City Half Marathon’, which was held today, and tied up with Tabono Sports Private Limited for the purpose.

“At HCL Technologies, we believe that the physical and mental wellbeing of our employees is as important as professional growth. The event is growing in popularity with every passing year. From 700 participants in 2016, the 2020 edition of the HCL Lucknow Half Marathon is expected to have participation from nearly 6,000 runners,” Gupta said.

HCL Technologies CEO C Vijayakumar to chair WEF Governors community

HCL Technologies’ CEO C Vijayakumar on Wednesday was named chairman of the World Economic Forum’s IT Governors community. The Forum’s IT Governors community convenes CEOs of the world’s top information technology (IT) companies in order to help them responsibly shape the future of their industry.

It acts as a platform for setting industry priorities, building shared understanding and coordinating actions that lead to results. Vijayakumar will prioritise dialogue and action around the most pressing issues, impacting the industry’s future progress like talent re-skilling, data governance, security and privacy, the firm said.

HCL Tech falls 5% from day's high on profit booking post Q3 results

Shares of HCL Technologies declined 5 per cent to Rs 586 from its early morning high on profit booking. The stock of the country’s third-largest information technology (IT) services firm hit a new high of Rs 619, up 3 per cent after it reported a better-than-expected 2.1 per cent quarter on quarter (QoQ) revenue growth in constant currency (CC) terms. Street had expected growth of around 1.5 per cent.In the past one month, HCL Technologies has outperformed the market by gaining 8 per cent, as compared to 1 per cent rise in the S&P BSE Sensex.

Operating margins were also better than street expectations as the numbers improved to 20.2 per cent - highest in past eleven quarters led by better product mix and operational efficiency.

The company raised its full-year revenue growth guidance to 16.5-17 per cent in constant currency (CC) terms from 15-17 per cent earlier. Further, the company expects FY20 operating margin (EBIT) to come in the range of 19-19.5 per cent from 18.5-19.5 per cent earlier.

Analysts at Antique Stock Broking maintain ‘buy’ rating on HCL Tech with the price target of Rs 700 per share.

“For FY20 we expect HCL Tech to report CC organic growth of 10.8 per cent which is highest among top-4 IT services companies. However expect organic growth to slow down to 7.8 per cent in FY21e as company didn't sign any mega deals like we saw at the end of last fiscal year,” the brokerage firm said in a result review note.

“Despite the organic growth moderation in FY21E as compared to FY20E in the absence of mega deals, HCL Tech’s growth leadership is intact supported by strongest-ever deal pipeline and improvement in conversions, enhanced services/product bouquet with large cross-sell opportunities. Superior operating profile and cross-sell synergies, make up to some extent for the capital intensity and longevity concerns of the product business,” analysts at HDFC Securities said in the result review report. The brokerage firm has set 12-month target price of Rs 665 per share.

At 09:47 am, HCL Tech was trading 1.4 per cent lower at Rs 590 on the BSE, 133 points or 0.32 per cent fall in the S&P BSE Sensex. A combined 4.07 million equity shares changed hands on the counter on the BSE and NSE so far.

HCL Technologies gains 2% after fixing record date for bonus issue

Shares of HCL Technologies climbed 2 per cent at Rs 1,135 on the BSE on Wednesday after the IT company fixed December 7 as the record date for the 1:1 bonus share. The stock will turn ex-bonus on December 5, 2019.

The board of directors of HCL Tech at their meeting held on October 23, had approved and recommended issue of one bonus share for every one equity share held by the equity shareholders of the Company.

Since October 23, HCL Tech has outpaced the market by gaining 7 per cent on the BSE. In comparison, the S&P BSE Sensex and the S&P BSE IT index were up 5 per cent and 3 per cent, respectively. The stock is trading close to its all-time high of Rs 1,190, touched on April 30, 2019.

Meanwhile, HCL Tech had revised guidance up by 100bps+ to 15 per cent-17 per cent in constant currency (CC) for FY20.

“More importantly the company now expects organic growth of about 10-11 per cent for the year which is quite encouraging given weak outlook shared by most of the peers during the earnings commentary”, analysts at Dolat Capital said in Q2 result update.

“Strong operating performance, upward revision in guidance, robust outlook and confident commentary reinforces our preferred pick view on the stock. We largely retain our operating estimates for the business and retain our ACCUMULATE rating on the stock with revised target price of Rs 1,285 valued at 15x PER on FY21E earnings (higher multiple justified given superior financial performance),” the brokerage firm said.

HCL Tech Q2 net income rises 4.4% to Rs 2,651 crore, EBIT up 17.9%

HCL Technologies, the country’s third-largest information technology services firm, reported a 4.4 per cent annual rise in net income in the September-ended quarter (Q2) at Rs 2,651 crore.

It raised its full year revenue forecast to a growth of 15-17 per cent in constant currency, from a 14-16 per cent range earlier, because of its strong deal pipeline.

HCL Technologies, the country’s third-largest information technology services firm, reported a 4.4 per cent annual rise in net income in the September-ended quarter (Q2) at Rs 2,651 crore.

It raised its full year revenue forecast to a growth of 15-17 per cent in constant currency, from a 14-16 per cent range earlier, because of its strong deal pipeline.

The earnings before interest and tax (EBIT) rose 17.9 per cent to Rs 3,497 crore during the quarter.

On Wednesday, the Noida-based firm reported a 20.5 per cent rise in annual revenue in constant currency to Rs 17,528 crore. On a sequential basis, revenue in the quarter ended September 30, rose 6.7 per cent while net income rose 19.4 per cent.

The commentary is similar to that of closest rival Infosys, which expects its revenue to grow at 9-10 per cent in FY20.

“We started the year with 14-16 per cent growth (target) where 7-9 per cent was organic growth. Last quarter, we said organic is increasing from 7-9 per cent to 8-10 per cent. Now, it is going to be 10-11 per cent.

So, there is a significant uptick in the organic growth guidance compared to what we said last quarter,” said HCL Technologies CEO C Vijayakumar.

As part of its ongoing focus on products and platforms, HCL Tech bought some IBM products for $1.8 billion last year. The acquisition closed in June this year and now contributes to HCL’s revenue.

The company also named Shikhar Malhotra non-executive non-independent director of the company from October 22. Malhotra is the son-in-law of HCL founder and chairman Shiv Nadar. Malhotra is currently the executive director and board member of HCL Corporation.

The operating margin during the quarter was 20 per cent, and HCL Technologies expects to end FY20 with an operating margin of between 18.5 and 19.5 per cent.earnings before interest and tax (EBIT) rose 17.9 per cent to Rs 3,497 crore during the quarter.

On Wednesday, the Noida-based firm reported a 20.5 per cent rise in annual revenue in constant currency to Rs 17,528 crore. On a sequential basis, revenue in the quarter ended September 30, rose 6.7 per cent while net income rose 19.4 per cent.

The commentary is similar to that of closest rival Infosys, which expects its revenue to grow at 9-10 per cent in FY20.

“We started the year with 14-16 per cent growth (target) where 7-9 per cent was organic growth. Last quarter, we said organic is increasing from 7-9 per cent to 8-10 per cent. Now, it is going to be 10-11 per cent.

So, there is a significant uptick in the organic growth guidance compared to what we said last quarter,” said HCL Technologies CEO C Vijayakumar.

As part of its ongoing focus on products and platforms, HCL Tech bought some IBM products for $1.8 billion last year. The acquisition closed in June this year and now contributes to HCL’s revenue.

The company also named Shikhar Malhotra non-executive non-independent director of the company from October 22. Malhotra is the son-in-law of HCL founder and chairman Shiv Nadar. Malhotra is currently the executive director and board member of HCL Corporation.

The operating margin during the quarter was 20 per cent, and HCL Technologies expects to end FY20 with an operating margin of between 18.5 and 19.5 per cent.

HCL's Nadar tops FY19 Hurun philanthropy list with Rs 826-cr contribution

HCL Technologies Chairman Shiv Nadar topped the list of India's most generous philanthropists. He contributed Rs 826 crore during the financial year 2018-19 (FY19).

Wipro founder Azim Premji was second with Rs 453 crore. Reliance Industries Chairman Mukesh Ambani was third with Rs 402 crore, according to the EdelGive Hurun India Philanthropy List 2019 released on Monday.

"Three key trends emerge from this year's edition. First, as the rich Indians get richer, their contribution to the philanthropic causes too witness a jump. Two, there remains a lot of potential for corporate India to grow well by doing good. Case in point, the contribution from the top 10 individuals on the list account for 61 per cent. In other words, the remaining 90 individuals account for 39 per cent. There remains a lot of untapped potential which will come at the forefront with initiatives such as these. And three, corporate India is banking and investing on education — much more than any other cause. The megatrend at play here is that the focus of philanthropy in the country is shifting from donating to empowering. It is indeed a long term play, but would surely lead to lasting change in the years to come", Anas Rahman Junaid, Managing Director and Chief Researcher, Hurun Report India, said in a press statement.

Vidya Shah, CEO of EdelGive Foundation, added that the list is working towards better evidence-based giving for non-governmental organisations (NGOs).

"When we embarked on this partnership with the Hurun Report India, our overall objective was to understand giving in India based on evidence and data. It is very satisfying to see the results show a significant growth in philanthropy in India, with the number of individual donors at an all-time high. As a sector, we now need to ensure that this 'giving' is resulting in a positive change in social indicators and being optimally utilized towards programmatic and organisational growth of our NGOs on-ground", she said.

HCL to launch 'Tech Bee' programme to train, hire students after class 12

HCL Technologies is all set to roll out "Tech Bee", a company initiative under which it trains and hires students who have completed plus two, across several states, a senior official of the tech giant said here Thursday.

HCL Technologies executive vice-president Srimathi Shivashankar said the pilot programme of "Tech Bee", which was taken up two years ago in Uttar Pradesh and Tamil Nadu yielded good results.

As many as 700 students have now become employees of the company while some of them are pursuing higher studies as part of the initiative, she added.

"We have not fixed a number for recruiting students. This is first time we are actually going into many states to assess the quality and the aspirations of the students," she said at a press conference.

The company was looking at Tamil Nadu, Telangana, Andhra Pradesh and Karnataka in the south, Srimathi Shivashnark said adding in the North they were looking at Haryana, Uttar Pradesh, Uttarakhand and Maharashtra.

"The reason for selecting these states is that HCL is operating in these places. We have development centres across these locations or states. That is the reason we are focusing at these States to start with," she said.

Tech Bee, HCL's early career programme provides students an opportunity to start early, become financially independent and trendsetters.

Students who wish to join this program should have scored a minimum of 60 per cent marks in their class 12 examination with mathematics as a compulsory subject.

Students who wish to enrol in the program undergo an entrance test.

Enrolled students are paid stipend of Rs 10,000 per month, she explained.

While working at HCL, students can enrol in higher education programmes offered by reputed institutions like BITS Pilani and SASTRA University, she added.

The students after completion of required training will be recruited with salary range of Rs two lakh to Rs 2.5 lakh depending on what work stream they are taken into.

They also would have to execute a service agreement of three years with HCL, she said.

HCL Tech overtakes Wipro to become third-largest IT services firm in India

HCL Technologies (HCLT) on Thursday surpassed Wipro to become the third-largest IT services firm in India in 2018-19, making the first change in the pecking order of the country’s $170-billion IT outsourcing industry in the last seven years.

The Noida-based IT services firm announced its revenues touched $8.63 billion in the last financial year, a rise of 10 per cent over the previous financial year.

In constant currency terms, the rise was 11.8 per cent.

Wipro, in comparison, posted IT services revenues of $8.12 billion, up 3.8 per cent over the preceding financial year.

Last year, Wipro’s full-year revenue totalled $8.06 billion, more than $220 million above HCL Technologies’ $7.84 billion.

For the fourth quarter ended March, HCL Technologies met the street estimates with its revenues and net profit coming in line with analysts' expectations. The IT firm posted a net profit of Rs 2,568 crore, up 15.3 per cent on a year-on-year basis, though it declined 1.7 per cent sequentially.

HCL Tech overtakes Wipro to become third-largest IT services firm in India Revenues in the fourth quarter were Rs 15,990 crore, a rise of 21.3 per cent YoY and 1.9 per cent sequentially.

The operating margin of the company, however, dropped 70 basis points to 18.9 per cent in the March quarter as compared to 19.6 per cent in the preceding quarter.

For the whole financial year, the net profit of the Shiv Nadar-promoted firm crossed Rs 10,000 crore to reach Rs 10,123 crore, up 15.3 per cent YoY. Similarly, revenues were Rs 60,427 crore, a rise of around 20 per cent on a year-on-year basis.

Its larger peers such as Tata Consultancy Services (TCS) grew 11.4 per cent in constant currency terms to touch a $20.91-billion top line, while Infosys’ revenues grew 9 per cent to touch $11.8 billion during the last financial year.

The operating margin of HCL Technologies contracted 20 basis points to 19.5 per cent in FY19.

On the back of a robust deal pipeline, the IT services firm gave a guidance for 14-16 per cent growth in revenues for FY20, making it the firm with the most optimistic outlook for this fiscal.

In comparison, the TCS management said the firm was hopeful of posting double-digit revenue growth in FY20, while Infosys has guided for a 7.5-9.5 per cent rise in the top line.

Similarly, HCL Technologies sees its margins to be in the range of 18.5-19.5 per cent.

"HCLT has delivered a truly blockbuster performance with double-digit constant currency revenue growth of 11.8 per cent, which outperformed the high end of our guidance. We once again, for the third time this year, set a new bookings' record," said C Vijayakumar, president and CEO at HCL Tech.

“We aspire to reach the $10 billion revenue milestone this fiscal year.” Last year, HCL Tech announced that it would buy eight software products or IPs from IBM at $1.8 billion, making it the single-largest acquisition by any Indian IT firm.

“We have launched a new set of products which is our own IP, and this is going to strengthen our portfolio in terms of products and platforms,” Vijayakumar said.

In the fourth quarter, the IT firm signed 17 new deals and added two more customers in the $100 million customer category.