HCL Tech Reports 3.7% YoY Revenue Growth in Q1, Lowers Margin Forecast
By ScanX News Team
HCLTech posted Q1 consolidated revenue of ₹30,349.00 crores, up 8.2% YoY. EBIT stood at ₹4,942.00 crores (16.3% of revenue), down 9.2% QoQ but up 3.1% YoY. Net income was ₹3,843.00 crores (12.7% of revenue), declining 10.8% QoQ and 9.7% YoY. The company revised its revenue growth forecast to 3.0% - 5.0% YoY and lowered EBIT margin expectations to 17.0% - 18.0%. HCLTech declared an interim dividend of ₹12.00 per share.
*this image is generated using AI for illustrative purposes only.
HCL Technologies (HCLTech), a leading global technology company, has reported its financial results for the first quarter, showcasing steady growth amid a shifting market landscape.
Revenue Growth and Performance
For Q1, HCLTech posted consolidated revenue of ₹30,349.00 crores, marking a 8.2% year-on-year (YoY) increase and a modest 0.3% quarter-on-quarter (QoQ) growth. In constant currency terms, the company achieved a 3.7% YoY growth, slightly outpacing its services business which grew at 4.5% YoY.
Profitability
The company's EBIT (Earnings Before Interest and Taxes) for the quarter stood at ₹4,942.00 crores, representing 16.3% of revenue. This indicates a 9.2% decrease QoQ and a 3.1% increase YoY. Net income came in at ₹3,843.00 crores, or 12.7% of revenue, showing a 10.8% decline QoQ and a 9.7% decrease YoY.
Segment Performance
HCLTech's IT and Business Services segment, which forms the core of its operations, generated revenue of ₹22,454.00 crores, growing 3.0% YoY in constant currency. The Engineering and R&D Services segment showed strong performance with 11.8% YoY growth, while the HCL Software segment experienced a slight decline of 3.0% YoY.
Revised Outlook
In light of the quarter's performance and future outlook, HCLTech has updated its forecasts:
- The company now expects overall revenue growth to be between 3.0% - 5.0% YoY in constant currency.
- Services revenue growth is also projected at 3.0% - 5.0% YoY in constant currency.
- HCLTech has lowered its EBIT margin forecast to 17.0% - 18.0%, down from the previous range of 18% - 19%.
Strategic Initiatives and Market Position
C. Vijayakumar, CEO & Managing Director of HCLTech, commented on the results: "Our AI propositions are resonating well with our clients and have been augmented further by our partnership with Open AI. Our pipeline continues to grow as the demand environment was stable during the quarter."
The company highlighted its strong position in the AI market, with Vijayakumar noting, "HCLTech's capabilities and strategic partnerships ensure our AI-led solutions are practical, comprehensive and significant value creators to our clients."
Dividend and Financial Health
The Board of Directors has declared an interim dividend of ₹12.00 per share, marking the 90th consecutive quarter of dividend payout. HCLTech maintains a robust financial position with free cash flow at $2,421.00 million on a last twelve months (LTM) basis, representing 121% of net income.
Conclusion
While HCLTech has shown resilience with continued revenue growth, the lowered margin forecast suggests challenges in maintaining profitability amid market pressures. The company's focus on AI and strategic partnerships appears to be a key driver for future growth as it navigates the evolving technology landscape.
Note: All financial figures are in Indian Rupees (₹) unless otherwise stated.
Historical Stock Returns for HCL Technologies
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -1.13% | -3.79% | -13.22% | -12.96% | -6.14% | +112.54% |
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