HCL Tech Q4 Review - Inline, Low Exposure To Troubled BFSI Clients Leads To Better Outcome: ICICI Securities

ICICI Securities Report

HCL Technologies Ltd. reported its Q4 FY23 revenues at $3,235 million, down 0.3% QoQ in USD and down 1.2% QoQ in constant currency terms (better than our estimate of -1.9% and consensus at -1.5%).

Revenues in CC terms were up 10.5% YoY in Q4 FY23. IT and business services (74% of revenues) grew 1.6% QoQ CC, engineering research and development (16% of revenues) declined 3.8% QoQ CC, due to delay in decision-making in discretionary spending.

HCL Tech’s software business (~10% of revenues) fell 14.6% QoQ CC due to seasonality. For full year FY23, the company’s services segment grew 15.8% CC, slightly lower than the annual guidance of 16-16.5%.

Q4 FY23 Ebit margin came in at 18.2%, lower than our estimate of 18.9% and consensus at 18.4%, due to which Ebit of Rs 48 billion was 4% below our estimate and 2% below Bloomberg consensus. Profit after tax at Rs 40 billion was 2% below our estimates and 3% above Bloomberg consensus.

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