HCLTech aims to outperform peers in FY25: CEO C Vijayakumar

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s third largest IT services company HCL Technologies saw the highest year-on-year revenue growth of 8% year-on-year among its peers and the firm aims to maintain the trend.

“In FY23, we had the highest growth in services. In FY24, we maintained the growth leadership and I am confident that we will maintain the growth leadership in a handsome way this year as well. This is based on what we are seeing in the market, based on the deals that we are participating in and our pipeline,” CEO and MD C Vijayakumar told CNBC-Tv18 in a post-earnings chat.

His remarks come as the company has given a guidance of 3%-5% revenue growth YoY (CC) and EBIT margin at 18%-19% for FY25.

However, Vijayakumar highlighted that it’s important to remain cognisant of the fact that there has been some discretionary run-off all through FY24, and the same assumption was made to calculate the 3-5% guidance for FY25.

He explained that even if there’s a 2% decline in the first quarter of the current fiscal, HCLTech will still be the fastest-growing company year on year (YoY) and would probably record growth upwards of 5.6-5.7%, which is even higher than our guided range.

Even with a 1% growth assumption, it will still exceed the guided range, he said, adding that his company’s first half will be strong from a YoY perspective. “HCLTech cannot be compared on a QoQ because, in three out of the four quarters, there is seasonality in the business. In December, we have a peak and then there is a softness in the January to March quarter in the software business. Q1 is soft because YoY contract productivity kicks in.”

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HCLTech has seen $2.3 billion worth of booking this quarter, a bulk of which will translate into revenue in Q2 and subsequent quarters, Vijayakumar said. “This would nicely help us deliver the market leadership on the growth.”

As the company witnessed a flat full-year (FY24) operating margin of 18.2% compared to FY23, Chief Financial Officer Prateek Aggarwal said, the 19-20% aspirational margin has been pushed out.

“In FY23 and FY24, we had given the guidance of 18-19% and we delivered exactly the same number — 18.2% in both those years. Given the environment that we are currently going through, it is the right range for this period. The aspirational range of 19-20% that we have talked about is a little pushed out right now,” he said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow