6% jump in HCL Tech's net profit at Rs 4,350 crore

 New Delhi: HCL Technologies on Friday reported a 6.2 per cent 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 per cent 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 per cent 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 per cent, 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 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 USD 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 per cent Y-o-Y) and net profit of Rs 4,350 crore (up 6.2 per cent Y-o-Y) this quarter," HCL Tech Chief Financial Officer Prateek Aggarwal said.

The employee count at the company increased 1.11 per cent 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 per cent.

The company has projected a revenue growth in the range of 5 to 5.5 per cent 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 five to 6 per cent kind of a range. Given we have only one quarter, we had to kind of narrow the range. So we have done it 5 to 5.5 per cent," Vijayakumar said.

He said there has been in 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 like 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, productivity benefits to clients which is continuing to play out in vendor consolidation.