HCLTech Q2 Results: Profit Meets Estimates, Improves FY25 Guidance

HCL Technologies Ltd., India's third-largest IT company by market capitalisation, reported a sequential revenue increase of 2.9% for the second quarter ended September 2024. The company’s revenue totalled Rs 28,862 crore, aligning with analysts' estimates of Rs 28,637.2 crore, as tracked by Bloomberg.

In constant currency terms, revenue rose 1.6% quarter-on-quarter and 6.2% year-on-year. HCLTech's services revenue increased by 1.6% QoQ and 5.9% YoY, with digital revenue showing a rise of 7.8% YoY, contributing 38.5% of total services revenue.

• Revenue up 2.9% to Rs 28,862.00 crore versus Rs 28,057.00 crore. (Bloomberg estimate: Rs 28,637.2 crore)

• Net profit is down 1% to Rs 4,237.00 crore versus Rs 4,259.00 crore. (Bloomberg estimate: Rs 5,111.7 crore)

• Ebitda up 12% to Rs 5,362.00 crore versus Rs 4,795.00 crore. (Bloomberg estimate: Rs 4,061.6crore)

• Margin at 18.6% versus 17.1%. (Bloomberg estimate: 17.8%)

The company's revenue guidance was raised on the lower end. Its revenue growth and services revenue growth expectation is changed to 3.5–5% from 3–5% guided in the first quarter. The EBIT margin projections remain the same between 18% and 19%.

"It was a normal quarter where incrementally, the demand was better, so the overall revenue came much higher than what we expected," Chief Executive Officer C Vijayakumar said. "We did call out that we are already seeing green shoots and pickup in demand in financial services, which played out extremely well."

"Similar situations were seen in technology and services and a few other verticals. In addition, a pickup in demand for software businesses helped the revenue growth," the managing director said.

Bookings in the second quarter improved, with new deal total contract value reaching $2,218 million, higher than the $1,960 million recorded in the previous quarter.

The margins improved by 149 basis points and out of that, a 52 basis point improvement was contributed by the software business. Services business improved by 110 basis points, largely driven by operating expenses and a 24-basis-point contribution came in from favourable exchange movement, according to Chief Financial Officer Shiv Walia. "In Q3, we are confident of delivering a good quarter." 

The employee count stood at 2,18,621, a decrease of 780 from the last quarter, with the company hiring 2,932 freshers. The attrition rate rose to 12.9%, slightly above the 12.8% recorded in the April-June quarter.

"There is a slight drop in headcount, but on a year-on-year basis, after normalising for the divestiture reported last quarter, our headcount is still growing," Ramachandran Sundararajan, chief people officer at HCLTech, said. "We will continue with our fresher programme. Into FY26, the cycle that we are recruiting now, the focus is going to be on specialisation, not just the numbers."

Shares of HCLTech rose as much as 1.41% during the day to Rs 1,865.50 apiece on the NSE. The stock closed 0.88% higher at Rs 1,855.90 per share. This compares with a 0.66% advance in the benchmark Nifty 50. It has risen 46.06% in the last 12 months and 25.08% on a year-to-date basis.