HCL Technologies outperforms TCS and Infosys, beats profit estimates

• ByStartupStory     |    April 21, 2023

HCL Technologies managed to outperform market expectations, unlike its peers Tata Consultancy Services and Infosys. Although HCL’s net profit exceeded estimates, its revenue fell short of expectations. According to Bloomberg estimates, HCL’s net profit was projected to be at Rs 3,877 crore, while its revenue was expected to be at Rs 26,823 crore.

Despite the revenue shortfall, HCLTech is optimistic about its growth prospects. The company has guided for a revenue growth range of 6-8 percent in constant currency (CC) and services revenue growth of 6.5-8.5 percent in CC terms. However, these growth expectations are lower than what the company achieved in the previous fiscal year.

“FY23 has been a great year. The overall revenue came in pretty much at the midpoint of our guided revenue. The growth is attributed to good momentum in our services and business across segments, sectors, and geographies. We crossed Rs 1 trillion in revenue,” said C Vijayakumar, chief executive officer and managing director, HCLTech.

Vijayakumar further stated that HCLTech’s exposure to small and regional banks in the US is less than 1 percent, which helped the company perform better in the quarter. However, he acknowledged that the telecommunications and technology verticals would face pressure.

Indian IT services company, HCL Technologies, has reported its Q4 and full-year FY21-22 results, with revenue reaching Rs 1.01tn, up 18.5% YoY (up 13.7% CC) and net profit rising 10% to Rs 14,851 crore. “HCLTech guided for FY24 estimated CC US dollar sales growth guidance of 6-8 per cent. This is better than our expectation, considering Infosys’ guidance of 4-7 per cent. The management stated that booking delays and deal ramp-ups are only in the discretionary space, while cost optimisation and transformation initiatives in others continue. Deal bookings are showing slight moderation, while client additions stayed strong during Q4. Net headcount addition improved with decent fresher addition. The stock offers reasonable risk/reward for investment. We have a ‘buy’ rating on the stock,” said Sanjeev Hota, head-research, Sharekhan by BNP Paribas.

HCLTech also outperformed its peers in terms of employee additions, adding 4,480 freshers in Q4. The company intends to make good on all offers made, in contrast to TCS’s and Infosys’ soft hiring of 841 and net reduction of 3,611 respectively. Segment-wise, revenue from services grew 15.8% in CC terms, while revenue from the software business saw growth of 8.2% and digital revenue grew 17%. The company expects FY24 to be the year of consolidation on both the supply and demand sides.

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