HCL Technologies Ltd.’s revenue beat its own forecast for the third quarter, aided by demand for digital services as businesses moved online during the pandemic.
Revenue for the software services provider increased 3.8% over the preceding quarter to Rs 19,302 crore in the three months to December, according to an exchange filing. That compares with the Rs 19,090.8-crore consensus forecast of analysts tracked by Bloomberg.
Dollar revenue rose 4.4% to $2,617 million.
HCL Tech during the three months ended September had maintained its revenue growth guidance for third and fourth quarters at 1.5-2.5% sequentially. The company now expects revenue in the quarter ending March to grow at 2-3%. It also raised EBIT margin guidance for FY21 to 21-21.5% from 20-21% predicted earlier.
Other highlights (quarter-on-quarter)
Net profit rose 26.5% to Rs 3,977 crore—against the estimated Rs 3,138.9 crore.
EBIT margin expanded to 22.22% from 21.59%, despite wage hikes. Analysts had pegged the metric at 20.48%.
Operating income increased 10.3% to Rs 4,437 crore, compared with the Rs 3,911.5-crore forecast.
“This solid performance was driven by a robust momentum in our mode-2 and mode-3 businesses led by digital, cloud and products and platform segments. Our results reflect the success of the strategic investments we have made over the years, including unique ecosystem constructs with all cloud hyperscalers, organic and inorganic investments in a broad-based IP and platforms portfolio and an enterprise digital transformation value proposition that is truly integrated and differentiated,” C Vijayakumar, president and chief executive officer at HCL Technologies, said in the filing.
Technology companies saw their costs rise after the Covid-19 pandemic stalled trade and forced employees to work from work. The firms even lost billings as they generate most of their business overseas. The sector, however, rebounded in the second quarter, aided by large deal wins and client spending on cloud computing, artificial intelligence and internet of things as businesses moved online.
HCL Tech’s peers Tata Consultancy Services Ltd., Infosys Ltd. and Wipro Ltd., too, saw a rise in revenue and profit during the reported quarter. While TCS forecast double-digit growth in the next financial year, Infosys raised expectations for the ongoing fiscal. Wipro also upped guidance for IT services revenue in the fourth quarter.
Still, shares of HCL Tech fell 0.3% after the results were announced compared with a flat Nifty 50 Index.