HCLTech misses Q4 estimates, posts weak guidance for FY25

IT services major HCL Technologies on Friday reported lower-than-expected figures for the fourth quarter of financial year 2023-24, alongside a weak revenue growth and margin guidance for FY25.

In the ongoing fiscal year, revenue growth is expected to range anywhere between 3-5%, while the EBIT margin is likely to mirror FY24 trends at 18-19%, the company said.

“I believe FY25 would be another year of consolidation from both demand and supply side,” HCL Technologies Managing Director and Chief Executive C Vijayakumar said during the post-earnings press conference.

The Noida-headquartered company will be going to campuses once again, to recruit a total of 10,000-plus freshers during the ongoing financial year, Chief People Officer Ramachandran Sundararajan said. Alongside a hybrid work model, contractual hiring will continue to attract a tactical approach i.e. if required, he added.

Revenue during the January-March period registered a 7.1% annual growth to Rs 28,499 crore while net profit remained flat at Rs 3,986 crore year-on-year. On a sequential basis, the net profit declined 8.4%.

For the full financial year revenue came in at Rs 1,09,913 crore, up 8.3% year-on-year. Meanwhile net profit during the period improved by 5.7% to Rs 15,702 crore. 

The IT major signed 73 new large deals during the year to take the overall order book to $9,759 million, marking a 10% increase.

The company’s board has declared a final dividend of Rs 18 per share, to take the total to Rs 52 apiece for FY24.

“It's worth noting that some client feedback indicates dissatisfaction with HCLTech's service quality, highlighting the need for HCLTech to address this to maintain its growth momentum,” Gartner Senior Principal Analyst Biswajit Maity said, adding that the company has however done exceptionally well on the human resources front when other providers are grappling with attrition challenges.

Bucking the larger industry trend, HCLTech once again reported a net addition to its workforce - with 2,725 employees in the March quarter - to take the overall headcount to 2,27,481 as of March 31, 2024. The company added a total of 12,141 freshers during the full financial year, missing the initial target of 15,000.