Result Analysis HCL Technologies Ltd

HCL Techologies Limited is a global technology company, home to more than 221,000 people across 60 countries, delivering industry-leading capabilities centered around digital, engineering, cloud and AI, powered by a broad portfolio of technology services and products. We work with clients across all major verticals, providing industry solutions for Financial Services, Manufacturing, Life Sciences and Healthcare, Technology and Services, Telecom and Media, Retail and CPG, and Public Services. Consolidated revenues as of 12 months ending September 2023 totaled $ 12.9 billion.

Result Analysis: HCL Technologies Ltd.(CMP: Rs.1224)

Result Update: Q2FY24

Outlook:

HCLTech reported mixed earnings in Q2FY24 due to the bad macroeconomic conditions in the US and Europe, which are reflected in customers’ increased awareness of the situation, the near-term demand environment continues to be difficult. As a result, the near-term revenue performance is affected. Due to decrease in discretionary spending and the muted Q1 the firm has reduced its outlook downward to 5-6% from 6%-8%. In October, the company will increase wages. This would have an effect of 65 bps in Q3 and 25-30 bps in Q4. However, margins in FY24 should be supported by declining staff attrition and a better employee pyramid. In Q3 and Q4, revenue growth is anticipated to accelerate, driven by the closing of new deals and seasonally considered, the software segment’s third quarter is robust, which will boost growth.

Results:

Particulars (In Rs. Cr.)	Q2FY24	Q1FY24	Q2FY23	QoQ%	YoY%	H2FY24	H2FY23	YoY%
Revenue from Operations	26,672	26,296	24,686	1.4%	8.0%	52,968	48,150	10.0%
Other Income	365	344	236	6.1%	54.7%	709	645	9.9%
Total Income	27,037	26,640	24,922	1.5%	8.5%	53,677	48,795	10.0%
Employee Benefit Expenses	15,253	15,014	13,474	1.6%	13.2%	30,267	26,452	14.4%
Employee benefit Expenses as % of Sales	57.2%	57.1%	54.6%	10 bps	260 bps	57.1%	54.9%	220 bps
Outsourcing costs	3,508	3,628	3,706	-3.3%	-5.3%	7,136	7,299	-2.2%
Cost of Goods Sold	402	535	442	-24.9%	-9.0%	937	788	18.9%
Depreciation & Amortisation Expense	1,010	927	998	9.0%	1.2%	1,937	1,981	-2.2%
Other Expense	1,580	1,754	1,639	-9.9%	-3.6%	3,334	3,211	3.8%
EBIT	4,919	4,438	4,427	10.8%	11.1%	9,357	8,419	11.1%
EBIT Margin (%)	18.4%	16.9%	17.9%	160 bps	50 bps	17.7%	17.5%	20 bps
PAT	3,833	3,531	3,487	8.6%	9.9%	7,364	6,768	8.8%
PAT Margin (%)	14.4%	13.4%	14.1%	90 bps	20 bps	13.90%	14.06%	-20 bps
EPS (in Rs.)	14.15	13.05	12.89	8.4%	9.8%	27.2	25.01	8.8%

 

Segment Revenue (In Rs. Cr.)	Q4FY23	Revenue %	Q3FY23	QoQ%	Q4FY22	YoY%
IT	11797	44.2%	11,800	-0.02%	10,593	11.37%
BPO	1921	7.2%	1,935	-0.72%	1,524	26.06%
Total	13,718	51%	13,735	-0.12%	12,116	13.22%

 

Geography Revenue %	Q2FY24	Q1FY24	Q2FY23	QoQ	YoY
Americas	64.8	64.5	64.5	30 bps	30 bps
Europe	27.5	28.7	28.5	-120 bps	-100 bps
ROW	7.7	6.8	7.0	90 bps	70 bps

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