Leading IT services and outsourcing solutions provider HCL Technologies Ltd, (HCLTech) announced a net profit of ₹ 4,591 crore for the quarter ending December 31, 2024, a 5.5% year-on-year climb. On this front however, the company’s current performance is only slightly below market expectations. The company also proposed an interim dividend of ₹18 per equity share which is ₹6 special dividend in recognition of the company’s 25 years public listing.
Revenue Performance
HCLTech reported that the revenue from operations increased from ₹28,446 crore in the same period last year to ₹29,890 crore, up 5% YoY in Q3 of FY25. Still, the numbers were below the estimated ₹30,135 crore that was expected from the company according to a Moneycontrol poll of nine brokerages.
The company also missed the expected consolidated net profit of ₹4,596 crore or $635.4 million. However, HCLTech missed on some of these numbers, it achieved impressive margins and also re-establish its solid financial health.
Updated Revenue Guidance
On an FX neutral basis, viz const currency growth rate, for the full year FY25, HCLTech has crossed end revenue growth guidance figures. But the bottom of the range was upgraded by 100 basis points, and is now 4.5 – 5 % PA. In terms of EBIT margin gear for the year ending 31st March 2025 is 18-19% which are constant with the prior FY guidance.
In the quarter, the company had beaten its margin guidance it achieved an EBIT margin of 19.5% up 93 bps sequentially.
Market Response
Before the release of the quarterly results, HCLTech’s stocks fell by more than 1% to end at ₹1,975 on NSE. The stock had not posted a change for most parts of the trading session before the downward trend.
CEO’s Statement
Chief Executive Officer, C. Vijayakumar, and Managing Director of HCLTech said he was satisfied with the company’s performance.
HCLTech has delivered another quarter of good growth of 3.8% on a QoQ basis in constant currency and EBIT at 19.5%. I am glad that this growth comes on the back of diverse line of businesses as clients in diverse verticals and geographies continue to express their confidence in the Digital and AI portfolios,” Vijayakumar noted.
He also pointed to the record deal bookings – at $2.1 billion – for the quarter and the increasing adoption of artificial intelligence for different services and software.
CFO’s Analysis
Shiv Walia, Chief Financial Officer said that company always avoids growth at the expense of profitability.
The INR revenue of HCLTech was up at ₹29,890 crore a 3.6% QoQ and 5.1% YoY growth for the third quarter this fiscal. The high degree of focus on achieving topline growth with sustainable margins is evident in the highest-ever EBIT of ₹ 5,821 crore and net profit of ₹ 4,591 crore this quarter,” said Walia.
He also said that company’s EBIT margin of 19.5 % was higher by 93 bps sequentially and was for the quarter. The overall Return on Invested Capital (ROIC) increased, and reached 36.6% on LTM basis and 44.7% for services.
Another area of focus for the CFO organised around the company’s Cash Conversion which Total Cash Conversion exceeded its five year average with FCF /NI at 134 % for the quarter. The company’s cash reserves rose to their highest level ever, standing at ₹27,707 crore at the end of the period.
Dividend Announcement
The HCLTech declared the intention to pay out ₹18 per share, including a special dividend of ₹6 in commemoration of its public listing in a quarter century. This also shows that it has achieved the structure of paying dividend for the last 88 quarter that is an essential path of the company to jogging the shareholder welfare.
Industry Positioning and Future Outlook
The management assured investors and stakeholders their focus on using AI and other technologies as drivers of disruptive growth. He mentioned that there is the increasing demand for the propositions based on AI, which will remain the key to the company’s development.
HCLTech still missed revenue and profit estimates this quarter but explained that it has stayed disciplined on margins, net new deal bookings, and improving cash buffers all indicating that the company is in good health.
The breakdown in the analyst’s revenue and the firm’s ongoing investments in new solutions make it well-placed to re-establish its growth in the ripe IT-service industry. HCLTech continues as one of the key organizations that have given unrelenting efforts towards creating new technologies and providing value to the clients and shareholders.
