HCLTech Q3 Results: Net Profit Rises 8.4%, Meets Estimates

HCL Technologies Ltd.'s net profit rose 8.4% sequentially to Rs 4,591 crore in the December 2024 quarter, as per the consolidated financial results declared on Monday. The bottomline logged by the company is in line with the consensus estimate of analysts tracked by Bloomberg.

In the preceding quarter ended September 2024, HCLTech' net profit stood at Rs 4,235 crore.

The information technology major's revenue rose 3.6% sequentially to Rs 29,890 crore in the October-December period, as compared to Rs 28,862 in the preceding quarter. That compares with the Rs 30,036 crore consensus estimate of analysts tracked by Bloomberg.

HCLTech Q3 Results: Key Highlights (QoQ)

• Revenue up 3.6% at Rs 29,890 crore (estimate: Rs 30,036 crore)

• Net profit rose 8.4% Rs 4,591 crore (estimate: Rs 4,614 crore)

• Ebit increased 8.6% to Rs 5,821 crore (estimate: Rs 5,864 crore).

• Margin expanded 90 basis points to 19.5% (estimate:19.52%)

The company's revenue guidance was raised on the lower end. Its revenue growth and services revenue growth expectation was changed to 4.5–5% from 3.5–5% guided in the first quarter. Services revenue growth is also expected to be in the 4.5-5% range. The EBIT margin projections remain the same between 18% and 19%.

“Looking ahead, in 2025, we believe clients are looking at increasing their IT investments. We do see an improvement in the demand environment, discretionary spending is witnessing some uptick. They (clients) are investing to drive innovation and efficiency and in these initiatives Gen AI and Data are the centre," C Vijayakumar, chief executive officer and managing director of HCLTech, said during the the earnings call.

While the company is confident on the pace of medium term recovery, the fourth quarter outlook accounts for certain planned contractual reductions. On the positive side, small deals are getting converted quicker, while the large deals are taking a little more time to convert, he added. 

The IT and business services grew 5.8% on a year-on-year basis, slightly lower than 6.2% last quarter. The software business dipped 2.1% on a YoY basis. 

In terms of geographies, the company clocked a 6.2% YoY growth in the North and South American market, lower than 7.5% recorded last quarter.

The business in Europe grew 2.6% and business from "rest of the world" grew 2.9%. In terms of verticals, business from telecommunications, media, publishing and entertainment segments grew the highest at 33.1% on a YoY basis. However, financial services dipped 1.4%, life sciences and healthcare dipped 1.1%, and public services dropped 4.6%.

Bookings in the third quarter dipped, with new deal total contract value coming in at $2,095 million, lower than $2,218 million recorded in the previous quarter.

Amid a new administration taking stage in the US, the CEO noted there would be changes in the global business environment in the next couple of quarters. However, the company has no insight over the impact of such changes. Vijaykumar also added that the company is less dependent on H1B visas, and it will be business as usual with regards to immigration related issues. 

The employee count stood at 220,755, an increase of 2,134 employees from last quarter.  The attrition rate rose to 13.2%, higher than 12.9% recorded in last quarter. Ramachandran Sundararajan, chief people officer, at HCL Tech said, “We added more than 2,000 freshers in Q3, and we will be adding 1,000 more freshers in Q4. Further, we expect to significantly increase hiring number next year, and this will be on the back of our strong pipeline”

The quarterly results were declared by the company after the market hours. The shares had settled 0.52% lower at Rs 1,985.25 apiece on the BSE, compared to a 1.36% decline in the benchmark Sensex.

Follow the live updates on Q3 earnings here.