HCL Tech Q1 results: Consolidated net profit rises by 7.7% YoY to ₹3,534 crore in Q1; declares dividend

HCL Tech Q1 results: HCL Technologies earned a consolidated net profit of ₹3,534 crore, which is attributable to shareholders, in the first quarter of FY24, rising by 7.65% year-on-year. The tech player missed street estimates across parameters. A year ago, the company's PAT stood at ₹3,283 crore in the same quarter. The company has also declared an interim dividend of ₹10 per share.

However, HCL Tech's profit after tax (PAT) declined by 11.27% in Q1FY24 as against a profit of ₹3,983 crore recorded in the preceding quarter.

A similar pattern was seen in the top-line front. Consolidated revenue from operations jumped by 12.06% to ₹26,296 crore in Q1FY24, as against ₹23,464 crore in Q1 of FY23. However, revenue dipped marginally by 1.2% on a sequential basis.

In regards to segment-wise performance, HCL Tech's IT and business services revenue stood at ₹19,642 crore in Q1FY24, up by 15.06% YoY. While engineering and R&D services revenue saw a single-digit growth of 3.66% YoY to ₹4,047 crore, and HCL Software revenue climbed by 4.7% YoY.

In a board meeting held on Wednesday, the company's board of directors declared an interim dividend of ₹10 per share having a face value of ₹2 each for the financial year FY24. The record date to determine eligible shareholders for the dividend benefits is fixed on July 20, 2023. While the payment date for the said interim dividend is scheduled on August 1, 2023.

HCL Tech shares will react to the Q1 results on Thursday. Meanwhile, the stock ended at ₹1110.05 apiece, marginally down by 0.42% on BSE during Wednesday's trading session.

Moving on, the company posted EBIT of ₹4,460 crore in the quarter under review, slipping by 7.8% QoQ but rising by 11.7% YoY. EBIT margin of IT and business services stood at 16.1%, and that of engineering and R&D services came in at 16.8% in Q1FY24 versus 17.1% and 18.8% respectively in the previous quarter. Overall, the services EBIT margin is at 16.2% in Q1FY24, down from 17.4% in Q4FY23. Moreover, HCL Software EBIT margin was at 22.9% versus 23% in Q4FY23.

On a constant currency basis, the revenue was down by 1.3% QoQ but up by 6.3% YoY. In dollar terms, the revenue was at $3,200 million down by 1.1% QoQ but up by 5.8% YoY. The client base above the $100 million basket surged by 3% YoY, while the over $50 million category rose by 6% YoY.

HCL Tech won 18 large deals in Q1 of FY24, of which, 7 deals belonged in services and 11 deals in the software category. The company's TCV (new deal wins) stood at $1,565 million. While the overall pipeline is at an all-time high, grew by 17.7% QoQ and 26.2% YoY.

C Vijaykumar, CEO and Managing Director said, "In Q1FY24, our revenue and people strength sequentially moderated in line with the demand environment."

He added, "We experienced double-digit YoY growth, in our largest verticals - financial services, manufacturing, and life sciences and healthcare fueled by large deals. These large deals helped offset cuts in client discretionary spend in these verticals."

HCL Tech let go of 2,506 employees in Q1FY24, as the total headcount reached 223,438 people as against 225,944 employees in Q4FY23. A year ago, in the June quarter, the employees' headcount stood at 210,966 people at HCL.

Further, HCL Tech's LTM attrition rate dropped by 7.5% YoY to 16.3% in Q1 of the current fiscal.

Roshni Nadar Malhotra, chairperson said, "HCL Tech continues to be a partner of choice for global enterprises and is well placed to leverage opportunities in emerging areas such as AI and allied technologies despite the challenging global macro environment."

Also, Vijayakumar said, "We are expecting other verticals to pick up as well shortly. This combined with the strength of our record-high pipeline enables us to maintain our guidance for the year."

HCL Tech's full-year FY24 guidance includes revenue growth to be expected between 6% to 8% YoY in constant currency terms. Further, services revenue growth in CC is expected to be between 6.5% to 8.5% YoY. EBIT margin is estimated to be between 18% to 19% for the fiscal.