HCL Technologies Q4 Results Review - Defensive Portfolio To Help Navigate Macro Headwinds: Motilal Oswal

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Motilal Oswal Report.HCL Technologies Ltd.’s Q4 FY23 revenue declined 1.2% QoQ in constant currency, dragged by seasonal weakness in software business (down 14.6% QoQ in CC) along with a sudden ramp down in engineering research and development vertical (down 3.8% QoQ in CC). IT services, however, grew by a reasonable 1.6% QoQ in CC despite slowing demand environment. Net new deal total contract value was also soft at $2.1 billion (down 12% QoQ and 8% YoY) in Q4, while FY23 TCV ($8.86 billion) was up 6.7% YoY. Management guided for FY24 USD revenue growth of 6-8% YoY in CC (6.5%-8.5% YoY in CC for services).Ebit margin for Q4 FY23 (at 18.2%, down 140 bps QoQ) was in line and dipped due to seasonal weakness in software business coupled with the adverse impact from revenue decline in ER&D business. Management guided for FY24 Ebit margin to be in the 18-19% range and it maintained its mediumterm margin aspiration of 19-20%. While HCL Tech’s IT services vertical (up 1.6% QoQ in CC) fared better than its larger peers (Tata Cconsultancy Services Ltd. and Infosys Ltd.), cutbacks in discretionary spends in tech and telecom verticals hit ER&D and overall services business (up 0.6% YoY in CC). With continued traction in renewals and vendor consolidation, we expect the IT services vertical to deliver decent growth of 8.5% YoY in CC despite muted TCV (book-to-bill of 0.6 times). .Click on the attachment to read the full report:.HCL Technologies Q4 Results Review - Cautious On Ramp Downs, Discretionary Spends: IDBI Capital.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

HCL Technologies Q4 Results Review - Defensive Portfolio To Help Navigate Macro Headwinds: Motilal Oswal

ER&D slowdown leads to Q4 FY23 miss.

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