HCL Tech net profit rises 6.2% to Rs 4,350 Cr in December quarter

HCL Technologies on Friday reported a 6.2% increase in consolidated net profit at Rs 4,350 crore, highest ever on a quarterly basis, in the three months ended December 2023 on the back of growth in both services and software businesses.

The company had posted a consolidated net profit of Rs 4,096 crore in the same period a year ago, HCL Tech said in a regulatory filing.

The consolidated revenue of HCL Tech grew 6.5% to Rs 28,446 crore during the reported quarter from Rs 26,700 crore in the year-ago period.

"Our results this quarter have been remarkably strong with a revenue growth of 6% on quarter-on-quarter in constant currency driven by strong momentum in both services and software businesses.

We delivered a stellar operating margin of 19.8%, a 126 bps improvement Q-o-Q and 16 bps improvement Year-on-Year," HCL Tech CEO and Managing Director C Vijayakumar told reporters.

The services revenue of HCL Tech crossed Rs 1 lakh crore on a run rate basis during the quarter under review.

"HCL Tech delivered a stellar quarter with sequential growth driven by HCL Software, a spurt in the telecom vertical and engineering and R&D segment.

"Our services revenue has crossed a significant milestone of $12 billion (Rs 1 lakh crore) on a run rate basis. We also delivered the highest ever EBIT of Rs 5615 crore, up 7.4% Y-o-Y) and net profit of Rs 4,350 crore (up 6.2% Y-o-Y) this quarter," HCL Tech Chief Financial Officer Prateek Aggarwal said.

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The employee count at the company increased 1.11% to 2,24,756, with an addition of 3,818 freshers, in the latest December quarter compared to 2,22,270 in the year-ago period.

HCL Tech reported the lowest-ever attrition in the last seven years at 12.8%.

The company has projected a revenue growth in the range of 5 to 5.5% in the current fiscal on a year-on-year basis.

"We looked at the performance this quarter. We look at what is possible in the next quarter. That is a seasonally weak quarter for the software business services business. We will still continue to grow within 5-6% kind of a range. Given we have only one quarter, we had to kind of narrow the range. So we have done it 5-5.5%," Vijayakumar said.

He said there has been not much change in the macroeconomic environment but the company is positive on spending in engineering outsourcing and product development contracts.

"If you look at the broader IT spent, I think discretionary spending has really not picked up. It remains at similar levels to what we saw in the previous quarter.

"Having said that, there are always some bright spots where the spend is resilient. Like cyber security is an area, SAP migration is an area. Now a lot of customers are embarking on Gen AI programmes, but it also means they need to significantly transform and evolve their data landscapes. That is again a big opportunity area," Vijayakumar said.

According to him, the biggest opportunity continues to deliver hyper-automation, efficiency, and productivity benefits to clients which are continuing to play out in vendor consolidation.