HCL Tech improves OPM and guidance even as Shiv Nadar steps down
HCL Technologies may be the fourth major IT company to declare results but there has been a common thread. The growth has flattered, margins have been better than expectations and guidance has been robust. For the Jun-21 quarter, HCL Tech reported 12.48% yoy growth in revenues at Rs20,068cr and 2.17% growth sequentially. For the Jun-21 quarter, HCL Tech added 8 clients in the $50 million-plus category and 19 clients in $20 million-plus category. Order flows were up by 37% YoY.
While the IT & Business Services vertical contributed 72% of revenues for HCL Tech, it was the Products and Platforms vertical which reported EBIT margins of 23.5%. The big story was about margins. Operating margins at 19.6% were sharply higher in the Jun-21 quarter compared to 16.71% in the sequential Mar-21 quarter. Net margins at 15.97% were 3-times the Mar-21 net margins at 5.61%. HCL Tech guided operating margins at 19%-21% for FY22. Revenue growth guidance is at double digits for FY22. Better employee engagement and upskilling resulted in attrition rate falling sharply to 11.8% from 14.6% in the previous year.
Check: Top IT Companies results
In the midst of the flurry of financials, another big news was Shiv Nadar stepping down as Managing Director of HCL Tech and limiting himself to play a strategic advisory role. This was on the cards as most executive responsibilities were already split between the CEO and Roshni Nadar. At 76, Nadar has decided to call it a day and appointed CEO Vijayakumar as the MD. As the baton passes, it is to the credit of Nadar that he built an organization that is robust and self-sustaining. It is likely to be business as usual at HCL Tech.
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