HCL Tech Q2 net profit rises 3.9%, retains margin forecast

HCL Technologies Ltd reported a 3.9% year-on-year increase in consolidated net profit to Rs 3,265 crore for the July-September quarter, as revenue rose thanks to new deal wins.

Net profit for the second quarter was up 1.6% from Rs 3,214 crore in the first quarter, India’s fourth-largest software services exporter said.

Consolidated revenue for the second quarter was Rs 20,655 crore, increasing 2.9% sequentially and 11.1% from a year earlier.

The company said it signed 14 new large deals during the quarter, including with MKS Instruments Inc, Wacker Chemie AG and Munich Re.

In dollar terms, revenue came in at $2.79 billion, up 3.5% sequentially and 10.5% from a year earlier in constant currency. Net income was $441 million, up 1.2% sequentially and 4% from a year earlier.

The company retained its guidance for revenue to grow in double digits in constant currency for FY22. EBIT margin is expected to be between 19% and 21% for FY22, the company said, retaining its forecast. EBIT margin for the second quarter was 19%.

Other key details:

1) It booked new deal worth $2.245 billion, registering 38% YoY growth.

2) Q2 revenue growth powered by services revenue at 5.2% QoQ and 13.1% YoY in constant currency.

3) Engineering and R&D Services grew at 5.4% QoQ and 12.7% YoY in constant currency.

4) IT and business services grew at 5.2% QoQ and 13.2% YoY in constant currency.

5) Growth momentum led by life sciences and healthcare vertical (20.1% YoY in constant currency).

6) On a YoY basis, HCL added one client in the $100-million bracket and 12 clients in the $50-million basket.

7) HCL added net 11,135 employees during the quarter, the highest in the last 24 quarters. Its total headcount is now at 187,634.

Management Commentary:

HCL Technologies chairperson Roshni Nadar Malhotra said that the Covid-19 pandemic accelerated the need for building a sustainable future and investing in purpose-driven growth, and that the company believes in ‘The New Essential’ – the confluence of technology and human ingenuity – as the path forward.

“In the months ahead, we will further accelerate our actions and investments in emerging technologies, people and ESG to build a stronger and better future together,” she said, referring to environmental, social and governance standards.

C Vijayakumar, CEO and managing director at HCL Technologies, said the company delivered a healthy performance in the last quarter marked by strong growth across its services portfolio and led by its digital business as well as engineering and cloud services

“We had impressive client additions across all categories, reflecting strong demand and relevance of our offerings across all our client groups. We signed 14 large new deals which helped us to record net new booking of $2.3 billion, a growth of 38% YoY,” he said.

Vijayakumar said the company’s net employee addition hit an all-time high of 11,135 in the September quarter. “Our robust pipeline and continued strong employee ramp up augurs well for our business momentum going forward.”