HCL Tech posts muted revenue growth in Q1

IT services major HCL Technologies posted muted growth in its revenue for the first quarter as the pandemic impacted operations in key delivery centres. However, the company recorded strong deal wins and remained confident of clocking double digit growth in FY22.

HCL Technologies on Monday posted 9.9 per cent rise in its consolidated net profit at Rs 3,214 crore for the quarter ended 30 June, 2021.

Revenues for the first quarter were at Rs 20,068 crore, which was up 12.5 per cent over the same period of last year and 2.2 per cent over the preceding quarter.

In constant currency term, revenues were at $2.72 billion, which was a growth of 11.7 per cent year-on-year basis and 0.7 per cent in sequential term.

In comparison, TCS grew 2.4 per cent sequentially, while Infosys' revenue rose 4.8 per cent over the last quarter in constant currencyterm. For Wipro, the sequential growth in constant currency term was at 12 per cent.

"Our growth was led by Mode-2 services in this quarter though the company had to go through a very difficult time during this quarter as many of our employees got affected by Covid virus. We are very confident of good growth in the current financial year on the back of strong deal bookings and employee addition," said C Vijayakumar, Chief Executive Officer at HCL Technologies.

During the pandemic, large delivery centres in New Delhi and Chennai got affected as many employees got affected during the second wave of the pandemic.

In Q1 of FY22, HCL Technologies had a total contract value (TCV) of $1.66 billion with the win of eight large services deals and four product wins. This was higher than 37 per cent over the last fiscal year.

In the operating margin front, the margin was at 24.5 per cent, a dip of 160 basis points over the preceding quarter.

For FY22, HCL Technologies expects its revenues to grow in double digits, while the EBIT margin is likely to be in a range of 19-21 per cent.

Among the verticals, financial services grew 2.9 per cent sequentially, while life sciences &healthcare rose 5.4 per cent during this period. Meanwhile, retail & CPG and manufacturing saw negative growth sequentially.

During this quarter, HCL Technologies added 7,522 people to take its headcount to 176,499. Attrition for the quarter jumped 190 basis points to 11.8 per cent in sequential term.

"Keeping in mind the demand uptick, we plan to hire 22,000 freshers this year," said the CEO of HCL Technologies.

Meanwhile, the company announced that its founder Shiv Nadar has tendered his resignation as the Managing Director and is appointed as the Chairman Emeritus and strategic Advisor to the board.

Current CEO, C Vijayakumar will take up the role of Managing Director of the company in addition to being the CEO of the firm.

"The company has appointed C. Vijayakumar, President & CEO of the company as the Managing Director with a title of CEO & Managing Director' for a term of five years with effect from July 20, 2021," the company said in an exchange filing. The company also declared an interim dividend of Rs 6 per share for shareholders.