HCL Tech Maintains Q4 Net Profit at Rs 3,986 Crore Amid Cost Pressures

HCL Technologies, India's third-largest IT firm, disclosed its financial performance for the March quarter, revealing a steady year-on-year net profit at Rs 3,986 crore. Despite the global economic pressures and increased employee costs, the company managed to maintain its profitability, albeit with an 8.4 per cent dip in net profit compared to the previous quarter. The sequential decline from Rs 4,350 crore underscores the challenges faced by the IT sector globally.

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The Noida-based company's CEO, C Vijayakumar, commented on the results, highlighting the firm's agility in navigating the uncertain market conditions. He pointed out that despite reduced discretionary spending and a slowdown in certain key sectors, HCLTech achieved growth and maintained profitability. The company's success was particularly noted in its services and software businesses, with financial services and manufacturing being the top-performing verticals.

For FY25, HCLTech has set a revenue growth target of 3-5 per cent in constant currency terms and aims for an EBIT margin of 18-19 per cent. This guidance comes amidst a slight decrease in EBIT margin to 17.6 per cent in the fourth quarter from 19.8 per cent sequentially and from 18.1 per cent a year ago.

The company's geographical growth was led by the Americas with a 6.8 per cent increase year-on-year in constant currency, followed by Europe at 5.5 per cent. However, other regions saw a decline of 7.1 per cent. Employee costs rose by 11.5 per cent during the quarter, but attrition rates improved significantly to 12.4 per cent from 19.5 per cent in the same period last year.

Revenue from operations for Q4FY24 stood at Rs 28,499 crore, marking a 7.11 per cent rise from Rs 26,606 crore in the previous year. The full fiscal year saw HCL Tech reporting a net profit increase of 5.73 per cent to Rs 15,702 crore and revenue growth of 8.33 per cent to Rs 109,913 crore.

Vijayakumar expressed optimism about future growth prospects, particularly highlighting the role of AI and digital technologies such as cloud migration and cybersecurity in driving business expansion. The company's operational cash flow (OCF) saw a significant increase of 21.6 per cent year-on-year, with free cash flow (FCF) up by an impressive 27.7 per cent.

On the human resources front, HCLTech plans to continue its hiring momentum into FY25, expecting to add approximately 10,000 freshers to its workforce. The company concluded FY24 on a strong note with a total of 73 large deals secured throughout the year.

In addition to its financial achievements, HCLTech announced the appointment of Lee Fang Chew as an Independent Director effective April 25, 2024. The board also declared an interim dividend of Rs 18 per equity share for FY25, with the dividend payment scheduled for May 15, 2024.

Comparatively, India's largest IT company TCS reported a net profit increase of 9.1 per cent for its March quarter at Rs 12,434 crore. Infosys saw a substantial profit rise of 30 per cent to Rs 7,969 crore. Meanwhile, Wipro and Tech Mahindra experienced declines in net profits by 7.8 per cent and 40.9 per cent respectively.

HCLTech's stock performance reflected the challenging market conditions with a closing price that was 2.08 per cent lower at Rs 1,472.30 apiece on the BSE on Friday.