HCL Tech Q1 net profit up 9.9 percent to Rs 3,214 cr; company confident of double-digit revenue growth in FY22

IT services major HCL Technologies on Monday posted a 9.9 percent rise in consolidated net profit to Rs 3,214 crore for the June 2021 quarter, and exuded confidence in logging double-digit constant currency growth in FY22 on the back of a strong deal pipeline.

Also, Shiv Nadar, a pioneer in the Indian IT sector, has stepped down as the managing director and board member of the company, a year after handing over the reins of the IT major to his daughter, Roshni Nadar Malhotra.

C Vijayakumar, president, and CEO of the company will take on the role of managing director with the title of CEO and MD for a term of five years with effect from July 20.

The Noida-headquartered company had registered a net profit of Rs 2,925 crore in the April-June 2020 quarter (as per US GAAP). Its revenue grew 12.5 percent to Rs 20,068 crore in the quarter under review, from Rs 17,841 crore in the year-ago period.

“We posted an 11.7 percent year-on-year revenue growth in constant currency and 29 percent y-o-y growth in Mode 2 services in constant currency headlined by cloud and digital transformation deals.

“Both booking and pipeline remain healthy, and the pipeline expanding to the new levels across the board, we continue to see a convergence of application and infrastructure integrated opportunities,” HCL Technologies President and CEO C Vijayakumar told reporters in a virtual briefing.

This is a good sign for the future as it makes HCL Tech’s growth more broad-based and helps accelerate growth across all service lines, he added.

Vijayakumar said the company is confident of good quarter-on-quarter growth for the rest of this year, enabled by 37 percent y-o-y growth in bookings and 7,500-plus net hiring this quarter.

The company’s first-quarter TCV (total contract value) of new deal wins was at USD 1,664 million, up 37 percent year-on-year. In constant currency terms, HCL Tech’s revenue in the June 2021 quarter grew 11.7 percent y-o-y.

The revenue in constant currency terms is expected to grow in double digits, while Ebit (earnings before interest and tax) margin is expected to be between 19 percent and 21 percent for FY22.

In dollar terms, HCL Technologies’ net income was up 12.8 percent at USD 43 million in the June 2021 quarter, while revenue was higher by 15.5 percent at USD 2,719.6 million in the reported quarter over the year-ago period.

HCL Technologies announced its numbers after the close of market hours. Shares of HCL Technologies closed at Rs 1,000.20 apiece, marginally lower from the previous close on the BSE.

Sanjeev Hota, head (research) at Sharekhan by BNP Paribas, said HCL Tech reported below-than-expected revenue growth and operating profitability, while net profit remained in line with its expectation on the back of lower tax provisions.

Larger rivals Tata Consultancy Services (TCS) and Infosys have also posted strong growth numbers in the June quarter on the back of strong demand from customers looking to leverage digital technologies in the post-pandemic world.

TCS had posted 18.5 percent growth in consolidated revenues to Rs 45,411 crore in the June 2021 quarter, while Infosys saw its top line (revenue) rising 17.8 percent to Rs 27,896 crore. Infosys has raised its revenue growth outlook for the full fiscal to 14-16 percent (from 12-14 percent previously), buoyed by a robust deal pipeline and “strong” Q1 performance.

Wipro’s IT services revenue grew 12.2 percent sequentially to USD 2,414.5 million (25.7 percent y-o-y), and the company has provided a strong revenue growth outlook of 5-7 percent sequential increase in the September quarter.

At the end of the June 2021 quarter, HCL had 1,76,499 employees with a net addition of 7,522 people. Its attrition for information technology (IT) services (on the last 12-month basis) was at 11.8 percent.

During the briefing, HCL Technologies Chief Human Resources Officer (CHRO)Apparao V V said that last year, the company had onboarded 14,600 freshers globally.

“This year, we are targeting anywhere between 20,000-22,000 freshers and I will not be surprised if we cross this number…in Q2, we are targeting (to onboard) 6,000 (freshers),” Apparao said.

He added that the company, which had given salary hikes in October last year, will offer wage hikes from July 1 as it gets back to its regular cycle.

Apparao said HCL also expects to vaccinate 100 percent of its employees in the ongoing quarter. Currently, about 74 percent of its employees have been inoculated.

Asked about bringing employees back to the office, Apparao said that currently, about three percent of the employees in India are coming to the workplace, while others continue to work from home.

“We will take (a call on) it as we go…depending on the customers’ needs,” he added.

The board of directors has declared an interim dividend of Rs 6 per equity share for the financial year 2021-22. The record date of July 28, 2021, has been fixed for the payment of the interim dividend. 

Also Read: Shiv Nadar steps down as HCL Tech MD, C Vijayakumar to take over

Also Read: TCS, Infosys, Wipro, HCL, Tech Mahindra, Cognizant to cut 3 million jobs by 2022: Report

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