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StoxBox: Research on HCL Technologies

 D. K. Mudaraddi, Research Analyst, StoxBox on HCL Technologies Ltd. Q4 FY24.

HCL Tech’s Q4FY24 revenue was impacted heavily by the seasonal weakness in the software products business despite the reversal of furloughs and incremental revenues from telecom and entertainment segment contracts. Wage hikes and normalization of products and platforms segment margin led to a significant decline in margin underperforming its peers. Leakage in discretionary business has bottomed out for HCL Tech, but there are no signs of a pickup in discretionary spending. There have been no major large deal announcements by HCL Tech in Q4FY24 which is concerning considering that its peers were able to sign mega deal MOUs during the current weak demand environment. Commentary on ER&D, Tech and Telecom vertical performance, demand scenario going forward, and ramp-up of deal wins will be key monitorable going ahead.

HCL Technologies Ltd. Q4FY24 Result First Cut – A miss on all fronts; Revenue guidance trimmed

Reported revenue grew to Rs. 28,499 crores (up 0.2% QoQ / up 7.1% YoY) in rupee terms, marginally missing market estimates of Rs. 28,557 crores.
EBIT dropped 11% QoQ / up 3.9% YoY to Rs. 5,024 crores, missing market expectations of Rs. 6,364 crores. The EBIT margin contracted to 17.6% (down 221 bps QoQ / down 55 bps YoY).
Net income grew to Rs. 3,995 crores (down 8.2% QoQ / up 0.4% YoY), missing market estimates of Rs. 4,123 crores. The PAT margin contracted to 14% (down 128 bps QoQ / down 94 bps YoY).
LTM attrition continuing recent trends declined 40bps QoQ to 12.4% in Q4FY24.
Order book recorded for Q4FY24 stood at USD 2.29 billion.
The board of directors recommended a dividend of Rs. 18 per equity share.
HCL Tech reported a headcount of 227,481 employees as on March 31, 2024, with a net addition of 2,725 employees in Q4FY24.
For FY25, HCL Tech reduced revenue guidance to 3%-5% in CC terms from 5-5.5% projected earlier, while EBIT margin guidance was retained at 18-19%.

Disclaimer/Disclaimer: This press release serves for informational purposes only and does not constitute professional advice. Any reliance on the information provided is at the reader’s discretion.



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