HCL Technologies’ third quarter revenue growth beat Street estimates, but supply-side cost, increments and taxation pulled down net profit.
The company reported a net profit of Rs 3,442 crore, down 13.6 per cent year-on-year (YoY). Net profit was, however, up 5.4 per cent on a sequential basis. Revenue for the quarter grew 15.7 per cent YoY to Rs 22,331 crore, and rose 8.1 per cent sequentially.
On a constant currency basis, HCL Tech’s revenue was up 7.6 per cent sequentially, one of the best quarters in the last 12 years, said the company.
In terms of peer comparison, HCL Tech’s sequential revenue growth rates have come in at much higher levels. Infosys reported 7 per cent sequential growth, whereas TCS came in at 4 per cent. Wipro reported sequential revenue growth at 3 per cent.
Total contract value (TCV) for the quarter was $2.13 billion. TCV for the quarter was softer compared to the second quarter, which was $2.24 billion. But the TCV YoY was up 64 per cent. The company signed eight new large services deals and eight significant deals in product business.
HCL Tech guided for a double-digit growth on constant currency (CC) for FY22 and operating margins in the range of 19-21 per cent. “HCL Tech reported a stellar revenue growth of 7.6 per cent quarter on CC terms. This was led by strong recovery in its product business and continued strength in its services business. We believe the strong new deal wins, healthy deal pipeline, robust net hiring and investments in digital capabilities would help HCL Tech to accelerate its revenue growth in FY23. We have a ‘buy’ rating on the stock,” said Ashis Dash, research analyst, Sharekhan by BNP Paribas.
“We have delivered a stellar performance this quarter with revenue growth of 7.6 per cent in constant currency (quarter on quarter), the highest recorded in the last 46 quarters. This has been a spectacular quarter with a very strong revenue growth, sustained margin performance and a continued momentum in booking and pipeline, reflecting in all-round strength in the market,” said C Vijayakumar, CEO & MD, HCL Technologies.
Growth for the quarter was led by the products and platform segment that grew 24.5 per cent sequentially and 8.2 per cent YoY. It was followed by engineering and R&D services that grew 8.3 per cent sequentially and services that reported a growth of 5.3 per cent. Vertical growth was led by technology and services that grew 14 per cent sequentially, followed by retail and consumer-packaged goods (11.5 per cent) and telecommunications, media, publishing and entertainment (11.3 per cent).
In terms of geography, growth was driven by Europe, which grew 9.1 per cent, followed by Americas at 7.3 per cent.