HCL Tech Q3 profit meets estimates, revenue exceeds expectations
HCL Technologies, the fourth-largest Indian technology services firm, posted better-than-expected revenue growth for the third quarter ended Dec. 31 while its net profit was in line with analysts’ projections.
The firm’s net profit rose 5.4% sequentially but declined 13.6% year-on-year, as anticipated, to Rs 3,442 crore for the quarter. In dollar terms, net income rose 3.8% sequentially and it declined 15.2% compared to the year-ago period, to $458 million.
HCL Tech’s revenue growth was a tad higher than what the street had expected. The firm’s revenue rose 8.1% sequentially and 15.7% year-on-year to Rs 22,331 crore. In dollar terms, revenue was up 6.7% and recorded 13.8% rise over the same quarter in FY21, to $2.9 billion.
Revenue growth in constant currency was pegged at 7.6% over Q2 FY22 and 15% over the corresponding period a year ago.
Other Key Highlights
1) EBIT margin was pegged at 19%, a tad lower than expectations.
2) EBIT rose 8.5% sequentially and declined 3.7% year on year in rupee terms.
3) In dollar terms, EBIT declined 5.5% YoY while growing 7% sequentially.
4) EBITDA margin came at 23.4%, with operating profit rising 8.3% sequentially to Rs 5,242 crore, 3.7% lower than the previous year.
5) Added one client with contract value of $20-50 million and $50-100 million range each.
6) The firm also added eight clients in the $10-20 million range, and 35 in the $1-10 million range.
7) HCL said it expects FY22 revenue to grow in double digits in constant currency with EBIT margin expected to be between 19% and 21%.
8) Attrition rate has almost doubled to 19.8% versus 10.2% a year ago and 15.7% as of September 30.
C Vijayakumar, CEO and Managing Director at HCL Technologies, said the company delivered “stellar performance” this quarter with revenue growth of 7.6% in constant currency sequentially, the highest recorded in the last 46 quarters.
The Products and Platforms segment led the growth with 24.5%, followed by Engineering and R&D Services with 8.3% and IT and Business Services with 4.7%, all in constant currency sequentially.
“Our future looks bright as we had a very strong net new booking of $ 2.1 billion, a 64% YoY increase. We also added more than 10,000 to our employee strength this quarter,” he said.
CFO Prateek Aggarwal said this was clearly a quarter of record growth. He said Free Cash Flow (FCF) increased 33.7% sequentially at $521 million, 114% of Net Income.
“We closed the quarter with gross cash at $2.7 billion and net cash at $2.1 billion, despite higher dividend payout, purchase of shares by the RSU Trust and acquisition of balance shareholding in Actian during the quarter,” he said.
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