HCL Tech Q2 net profit rises, beats analyst estimates

The company marginally raised its revenue growth guidance for the current fiscal year to 3.5-5%, up from 3-5% announced in the previous quarter. It expects the earnings before interest and tax (EBIT) margin to be between 18% – 19%.

Bengaluru: India’s third largest IT service provider HCL Tech posted a 11per cent rise in its net profit at Rs 4,235 crore in the July-September quarter (Q2FY25), beating analyst estimates. However, the bottomline saw a slight dip of 0.5 per cent on a sequential basis. Revenue stood at Rs 28,862 crores, up 8.2 per cent year-on-year. 

“We have delivered a stellar performance of 9.4 per cent year-on-year this quarter and 6.4 per cent growth in H1 FY25 in constant currency, demonstrating the increasing relevance of our products for the digital economy,” said C Vijayakumar, chief executive officer & managing director in an exchange filing on Monday. 

The management highlighted that good demand across verticals, especially in financial services was behind the increase in net profit. “Several deals got into execution and apart from pickup in demand and services, software business helped us deliver a strong revenue growth,” said Kumar in the post earnings briefing. 

The company marginally raised its revenue growth guidance for the current fiscal year to 3.5-5 per cent, up from 3-5 per cent announced in the previous quarter. It expects the earnings before interest and tax (EBIT) margin to be between 18 per cent – 19 per cent.

The IT services provider’s margin improved by 149 basis points (bps) in Q2, largely driven by the services and software segment. 

The Noida headquartered company also announced an interim dividend of Rs 12 a share in Q2. Additionally, the company added 2,932 freshers in Q2, taking its total employee count to 218,621, a marginal fall from  219,401 in April-June quarter. HCLTech has started recruiting for its FY26 cycle, campus hirings and has also gone ahead with a wage hike, which will be effective from October 2024. The average hike for India-based employees will be 7 per cent, while top performers will see a double-digit hike, said Ramchandran Sundarajan, chief people officer. 

Order wins stood at $2,218 million for Q2, higher than $1,960 million in the previous quarter. 

Amidst an ongoing debate of global capability centres eating up client share of the IT services providers, Kumar said that both will co-exist. “There is deflation in the IT services market, however, some market share going to the GCCs won’t impact the big picture growth for us. We help them to scale and innovate,” he added. 

“The overall outlook remains positive as HCLTech continues. Company's strong deal pipeline combined with Gartner's raise in IT spending forecast in 2Q24 by 1.3 per cent makes us optimistic about its future growth,” said Ishan Anand, Principal Analyst, Gartner.