HCL Technologies Limited (HCLTech) has announced its financial results for the first quarter, showcasing steady growth and a positive outlook for the year ahead.

Revenue Performance

HCLTech reported consolidated revenue of ₹30,349.00 crores for Q1, marking an 8.2% year-over-year increase and a slight 0.3% quarter-over-quarter growth. In constant currency terms, the company's revenue grew by 3.7% year-over-year, although it experienced a marginal decline of 0.8% compared to the previous quarter.

Segment-wise Performance

The IT and Business Services segment continued to be the primary revenue driver, contributing ₹22,454.00 crores to the total revenue. The Engineering and R&D services segment showed strong growth, generating ₹5,174.00 crores in revenue. The HCL Software segment contributed ₹2,721.00 crores to the overall revenue.

Profitability

The company's EBIT (Earnings Before Interest and Taxes) stood at ₹4,942.00 crores, representing 16.3% of revenue. This reflects a 9.2% decrease quarter-over-quarter but a 3.1% increase year-over-year. Net income for the quarter was ₹3,843.00 crores, accounting for 12.7% of revenue. This indicates a 10.8% decline from the previous quarter and a 9.7% decrease compared to the same period last year.

Future Outlook

Looking ahead, HCLTech has provided a positive forecast:

• The company projects overall revenue growth between 3.0% and 5.0% year-over-year in constant currency terms.
• Services revenue is expected to grow between 3.0% and 5.0% year-over-year in constant currency.
• EBIT margin is anticipated to be in the range of 17.0% to 18.0%.

Key Highlights

• HCLTech's total contract value (TCV) for new deal wins in Q1 reached $1,812.00 million.
• The company maintained a strong focus on talent, with a total headcount of 223,151 employees.
• HCLTech added 1,984 freshers during the quarter.
• The Last Twelve Months (LTM) attrition rate stood at 12.8%, on par with the same period last year.

Management Commentary

Roshni Nadar Malhotra, Chairperson of HCLTech, emphasized the company's commitment to responsible AI deployment and its potential for positive social impact. C Vijayakumar, CEO & Managing Director, highlighted the company's healthy revenue growth of 3.7% year-over-year, driven by strong performance in the Services business. He also noted that HCLTech's AI propositions are resonating well with clients, further augmented by the company's partnership with OpenAI.

Dividend Declaration

The Board of Directors has declared an interim dividend of ₹12.00 per equity share, maintaining its track record of consistent shareholder returns.

HCLTech's Q1 results demonstrate the company's resilience and adaptability in a dynamic market environment. With a strong focus on AI-led solutions and strategic partnerships, HCLTech appears well-positioned to capitalize on emerging opportunities in the technology sector.

HCL Technologies Limited (HCL Tech), a leading global technology company, has announced its financial results for the first quarter, along with a dividend declaration and insights into its AI team utilization.

Financial Performance

HCL Tech reported a consolidated net profit of ₹3,843.00 crore for Q1, marking a 10% year-on-year decline. This figure fell below market estimates. However, the company's revenue from operations saw an 8% increase, reaching ₹30,349.00 crore, which was marginally above expectations.

Segment-wise Performance

The company's performance across its business segments for Q1 was as follows:

Profitability Metrics

The company's EBIT (Earnings Before Interest and Taxes) for Q1 stood at ₹4,942.00 crore, down 9% sequentially from ₹5,442.00 crore in the previous quarter. Consequently, the EBIT margin decreased to 16.35% from 17.99% in the last quarter.

AI Team Utilization Challenges

HCL Technologies reported that one-third of its AI-focused team is currently underutilized, resulting in an 80 bps impact on margins. The company expects these utilization challenges to moderate in Q2 and Q3, with a projected 10-20 bps full-year margin drag.

Dividend Announcement

HCL Tech's Board of Directors has declared an interim dividend of ₹12.00 per equity share. The record date for this dividend is set for July 18, with the payment scheduled for July 28.

Future Outlook

Looking ahead, HCL Tech has provided guidance for the fiscal year. The company projects revenue growth of 3-5% year-on-year in constant currency. Additionally, the EBIT margin is expected to be between 17-18%.

Hiring Plans

HCL Technologies plans to increase hiring for FY26, focusing on specialized roles and freshers to support its growth strategy and address the evolving needs of the technology sector.

Management Commentary

C. Vijayakumar, Chief Executive Officer and Managing Director of HCL Technologies, stated, "Our Q1 results reflect the ongoing global economic challenges, but we remain focused on delivering value to our clients through our comprehensive range of services and solutions."

Looking Ahead

While the company faces headwinds in the form of reduced profits and AI team underutilization, the increase in revenue suggests resilience in HCL Tech's business model. The company's diverse portfolio across IT services, Engineering R&D, and software products continues to provide a balanced approach to navigating market fluctuations.

Investors and market analysts will be keenly watching how HCL Tech adapts its strategies to improve profitability and AI team utilization while maintaining growth in the coming quarters, especially in light of the provided guidance and hiring plans.