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
Stock Details
Market Cap. (Cr.) 332166.19
Equity (Cr.) 542.73
Face Value 2
52 Wk. high/low 1311 / 945
BSE Code 532281
Book Value (Rs) 241.02
Sector IT – Software


Key Ratios
Debt-equity: 0.09
ROCE (%): 27.62
ROE (%): 23.32
TTM EPS: 55.65
P/BV: 5.07
TTM P/E: 22.00



Result Highlights:

  • HCLTech reported a marginal increase of 1.4% in the revenue on sequential basis to Rs. 26,672 while Net profits increase of 8.6% QoQ to Rs.3,833 cr. in the second quarter of FY24. The key reasons for the subdued revenue increase were clients giving cost-cutting programs higher priority and the ongoing slowdown in discretionary expenditure.

  • EBIT margin increased from 16.9% to 18.4% QoQ by 150 bps mainly due to a 100 bps gain in utilization, a 70 bps decrease in subcontracting, and a 50 bps increase in discretionary spending such travel and recruiting, which have been somewhat offset by the purchase of ASAP.

  • Among segments, financial services and life sciences both had significant YoY increase of 12.5% & 9.8% respectively, and 1.7% & 1.6% QoQ growth. Due to the slowdown in discretionary expenditure, technology and manufacturing were negatively impacted on a QoQ basis, which also had an effect on revenue growth.

  • In terms of geography, growth in America and Europe was 1.4% QoQ & 0.8% QoQ, respectively & 3.9% YoY each. The low base last quarter was a major contributor to the rise in Europe.

  • The company received a net new TCV of US$ 3.96 billion from 10 service and 6 software contracts. The deal involves a megadeal that Verizon secured.

  • Attrition rate dropped to 14.20% vs 16.30% of previous quarter, company lost 2,299 associates during the quarter, and had a closing headcount of 221,139 associates.

  • EBIT margin forecast for FY24 is unchanged at a range of 18.0%-19.0% YoY in cc terms. Revenue growth is expected to be between 5.0% and 6.0%.

Management Commentary:

Commenting on September quarter results, C Vijaykumar, CEO and MD said, “Our revenue growth of 1.0% QoQ and 3.4% YoY on a constant currency basis, with a 154 bps Q0Q improvement in operating margin and improving cashflows, reflect our ability to execute well in an evolving business environment and our commitment to operational efficiency. Our new bookings of US$ 4 Bn this quarter is at an all-time high, driven by a standout mega deal. This achievement underscores our ability to seize exceptional opportunities in the market and gives us optimism for our medium-term growth prospects.”


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.


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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