Top Indian Companies: HCL Technologies

HCL Technologies is an Indian multinational information technology (IT) services and consulting company headquartered in Noida, Uttar Pradesh, India. It is a subsidiary of HCL Enterprise.

Originally a research and development division of HCL, it emerged as an independent company in 1991 when HCL entered into the software services business.

The company has offices in 50 countries including United Kingdom, United States, France, and Germany with a worldwide network of R&D, "innovation labs" and "delivery centers", over 187,000 employees and its customers include 250 of the Fortune 500 and 650 of the Global 2,000 companies.

It operates across sectors including aerospace and defense, automotive, banking, capital markets, chemical and process industries, energy and utilities, healthcare, hi-tech, industrial manufacturing, consumer goods, insurance, life sciences, manufacturing, media and entertainment, mining and natural resources, oil and gas, retail, telecom, and travel, transportation, logistics & hospitality. HCL Tech is Nifty-50 company with a weightage of 1.57% on the index.

HCL Enterprise

HCL Enterprise was founded in 1976.

The first three subsidiaries of parent HCL Enterprise were:

• HCL Technologies - originally HCL's R&D division, it emerged as a subsidiary in 1991

• HCL Infosystems

• HCL Healthcare

Currently HCL Technologies is a subsidiary of Vamasundari Delhi through a chain of entities in between.

Brief History

In 1976, a group of six engineers, all former employees of Delhi Cloth & General Mills, led by Shiv Nadar, started a company that would make personal computers. On 11 August 1976, the company was renamed Hindustan Computers Limited (HCL).

HCL Technologies is one of the four companies under HCL Corporation, the second company being HCL Infosystems. In February 2014 HCL launched HCL Healthcare. HCL TalentCare is the fourth and latest venture of HCL Corporation.

HCL Technologies began as the R&D Division of HCL Enterprise, a company which was a contributor to the development and growth of the IT and computer industry in India.

Acquisitions

In July 2018 US-based Actian was acquired by HCL Technologies and Sumeru Equity Partners for $330 million.

Operations

HCL Technologies operate in 50 countries, including its headquarters in Noida, India. It has establishments in Australia, China, Hong Kong, India, Indonesia, Israel, Japan, Malaysia, New Zealand, Saudi Arabia, Singapore, South Africa, the United Arab Emirates and Qatar.

In Europe it covers Belgium, Bulgaria, Czech Republic, Denmark, Estonia and Romania Finland, France, Germany, Italy, Lithuania, Netherlands, Norway, Poland, Sweden, Switzerland, Portugal, and United Kingdom. In the Americas, the company has offices in Brazil, Canada, Mexico, Puerto Rico, Guatemala, and United States.

Business lines

Applications Services and Systems Integrations BPO/Business Services:

1. Infrastructure Management Services (IMS)

2. IoT WoRKS DRYiCE

3. Digital & Analytics and e-publishing

4. Cybersecurity and GRC Services

5. Financial Risk & Compliance Solutions

Shareholding Pattern

The Shareholding Pattern page of HCL Technologies Ltd. presents the Promoter's holding, FII's holding, DII's Holding, and Share holding by general public etc.

Holder's Name No of Shares % Share Holding

No of Shares 2713665096 100%

Promoters 1190528242 43.87%

Foreign Institutions 554427321 20.43%

Banks/Mutual Funds 242998935 8.95%

Central Govt 491434 0.02%

Others 49069870 1.81%

General Public 94230698 3.47%

Financial Institutions 129756564 4.78%

Foreign Promoter 446662032 16.46%

GDR 5500000 0.2%

2022-23 Full year and Q4 Results

HCL posted a 10.85 per cent increase in consolidated net profit to Rs.3,983 crore in the fourth quarter of the financial year ended March 2023. The company posted a net profit of Rs.3,599 crore in the same period a year ago. HCL Technologies' profit, however, declined on the quarter-over-quarter basis by about 3 per cent from Rs 4,096 crore -- its highest-ever profit in any quarter.

The annual consolidated revenue from operations crossed Rs 1 lakh crore.

HCL Technologies' performance was within the guidance range for the current fiscal but due to the macroeconomic situation, it lowered the growth estimates for the current fiscal.

The company's revenue from operations rose by about 18 per cent to Rs.26,606 crore during the reported period from Rs 22,597 crore in the March 2022 quarter. However, sequentially, its revenue declined marginally from Rs 26,700 it reported in the third quarter.

For the year ended March 31, 2023, HCL Technologies' profit increased by 10 per cent to Rs 14,845 crore from Rs 13,499 crore in the same period a year ago.

The company's annual revenue increased by 18.45 per cent to Rs 1,01,456 crore at the end of 2022-23 from Rs 85,651 crore a year ago.

"We crossed Rs 100,000 crore in revenues for the first time. Thanks to 2.25 lakh HCL Techies across the world who have contributed in making this Rs 1,00,000 crore happen in this fiscal year," HCL Tech CEO and MD C Vijayakumar said.

Europe was the top-performing market for HCL with 20.5 per cent CC growth during the year, followed by the Americas with 14.4 per cent and the rest of the world grew 11 per cent.

In terms of constant currency, HCL Technologies' revenue grew 13.7 per cent. The company expected the revenue growth to be in the range of 13.5-14 per cent in constant currency terms.

HCL Tech services grew 15.8 per cent during the year in CC terms while software services grew 1.8 per cent.

HCLTech software business clocked an annual recurring revenue rate of USD 1 billion, about Rs 8,000 crore, during the year, Vijayakumar said.

It has reduced revenue growth guidance for the current fiscal in the range of 6-8 per cent on a year-over-year (YoY) basis in constant currency (CC) and EBIT (Earnings before interest and taxes) in the range of 6.5-8.5 per cent CC.

"While there are a lot of dynamics externally, we have some comfort to navigate this dynamic market because of the mix of capabilities and expertise in the service offerings we have," Vijayakumar said.

The company clocked an EBIT of 14.1 per cent in the financial year (FY) 2022-23.

The total headcount of the company stood at 2,25,944 at the end of FY23. HCL Technologies recorded an attrition of 19.5 per cent. Its net hiring was 3,674 during the report and the gross hiring of freshers was 4,480. The company, however, remained muted on hiring plans for the current fiscal.

HCL Tech Chief People Officer Ramachandran Sundararajan said that the attrition level is expected to decline based on the present trend.

The company will factor in attrition trends and the capacity that it has built up in the last two quarters, he added.

"The total fresher addition for the year was 26,734 that shy of the 30,000 aspirational number that we were working towards. But the good thing is that we honoured all the offers that we made. We onboarded everybody without having to make any delays," Sundararajan said.

He said that the company has a quarterly rolling plan for hiring, which allows it to make adjustments as per the requirement.

Brokerage Outlook

The stock trades at PER of 19.3x on FY24E EPS. Robust deal booking provides strong visibility about revenue outlook It is expected to meet its FY22 revenue growth guidance of double digit revenue growth(in cc terms) with EBIT margin band of 19‐21%. Yes Securities, Brokerage, value the stock at at 22.5x on FY24 earnings, arriving at target price of Rs 1,556/share

HCL Technologies’ third quarter revenue growth beat Street estimates, but supply-side cost, increments and taxation pulled down net profit.

The company reported a net profit of Rs 3,442 crore, down 13.6 per cent year-on-year (YoY). Net profit was, however, up 5.4 per cent on a sequential basis. Revenue for the quarter grew 15.7 per cent YoY to Rs 22,331 crore, and rose 8.1 per cent sequentially.

Total contract value (TCV) for the quarter was $2.13 billion. TCV for the quarter was softer compared to the second quarter, which was $2.24 billion. But the TCV YoY was up 64 per cent.

HCL Tech guided for a double-digit growth on constant currency (CC) for FY22 and operating margins in the range of 19-21 per cent.

ESG and sustainability

HCL’s commitment to a greener planet. Goal by FY 2020 Sustainability Parameter Reduce Carbon Footprint in Operations Invest in Renewable Energy Improve Water Efficiency Achieved by FY 2020 Reduced our per capita carbon footprint by 41% over the base year FY 2011.