IT major HCL Technologies on Friday reported a net profit of Rs 3,986 crore for the fourth quarter ended March 31, 2024, which is marginally higher than Rs 3,983 crore a year. Its revenue during January-March 2024 stood at Rs 28,499 crore, which is 7.11 per cent higher than the Rs 26,606 crore reported in the year-ago period.
On a quarterly basis, HCL’s net profit declined 8.36 per cent as compared with Rs 4,350 in the December 2023 quarter. Its revenue was flat in Q4 FY24 as compared with the Rs 28,446 reported in Q3 FY24.
The company’s board of directors has declared an interim dividend of Rs 18 per equity share of Rs 2 each of the company for the financial year 2024-25.
The technology and services vertical fell 8.7% year-on-year, while healthcare and lifesciences vertical fell 1%.
For the financial year 2025, the company forecast a revenue growth of 3%-5%.
As clients prioritise deals focussed on cost-cutting, they continue to hold back on non-essential spending such as cloud services, consulting and upgrading of existing software.
Additionally, an uncertain macroeconomic climate and geopolitical uncertainties have kept demand in India’s $254 billion IT industry subdued.
Peers Infosys, Tech Mahindra, TCS, LTIMindtree missed analysts’ estimates, while Wipro topped estimates.
For the quarter, the company’s net profit was flat at 39.86 billion rupees compared with the year-ago period. Analysts, according to LSEG data, estimated a profit of 41.10 billion rupees.
HCLTech’s new deal wins stood at $2.29 billion, compared with $1.93 billion in the previous quarter and $2.07 billion in the year-ago period.
Operating margins came in at 17.6%, down 50 bps due to higher wage costs.
HCL Tech Vs Other IT Companies: An Analysis
D K Mudaraddi, research analyst at Stoxbox, said, “Amid a challenging business environment, between TCS, Infosys, and Wipro, TCS’ result has displayed the most resilient performance across all fronts. Financials for Infosys and Wipro were weak as the companies were not able to ensure timely ramp-up of deals and fell prey to indecisive and subdued discretionary spending. TCS, however, was able to continue banking on its megadeals for healthy billing and was also able to ensure that their new deal pipeline continued to grow to multi-year highs underscoring their efficiency and proactive innovation in terms of services they provide to clients.”
He added that attrition, however, was the highest for Wipro, followed by Infosys and then TCS. Despite the decline in LTM attrition year-end headcounts reflect a significant reduction for Infosys, Wipro and TCS for the first time in over a decade. HCL Tech being an exception added employees during the period and the financial year. This decline reflects a cooling down of the job market after the pandemic-induced digital boom led to aggressive hiring by companies and startups. This comes at a time when IT companies are looking to improve the utilization rate of existing employees amidst lowering attrition, to grow margins.
“HCL Tech’s margins suffered more than others due to a slowdown in their high-margin software products business. After looking at the results of these IT giants one can notice a clear focus on efficiency and increasing utilization to subsequently realize higher margins in a challenging demand environment where discretionary spending has been on a decline. This environment has a few green shoots for example in the manufacturing and healthcare sectors however the largest sectors of BFSI, Retail and Energy still remain weak and recovery can only be expected from Q2FY25 onwards as finalized client budgets will come into execution,” Mudaraddi added.
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