Tag: HCL Technologies

Software companies put up their worst show since FY18

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

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The combined net profit of the country’s largest information-technology firms grew at the slowest pace in six years after clients across the globe cut back their discretionary spending due to an uncertain business environment. What is more worrying is that the sector is not out of the woods yet as most of them have lowered their margin aspiration for the next year as well.

Six software firms which form part of the Nifty50 Index saw their aggregate earnings increase by 4.1% to ₹1.06 lakh crore in FY24. That compares with the 6.3% rise reported in the previous year. The growth in the bottom line for the year was the lowest after 2018 when they together reported a 3.5% rise, according to data collated by CNBC-TV18. In fact, the net profit has been growing at a single digit over the last seven years, except FY19 and FY22 in which their aggregate profit surged by 13% and 18%, respectively.

While the net profit of Wipro and Tech Mahindra continued to decline for the second year in a row, the growth has almost halved for HCL Technologies. Similarly, Tata Consultancy Services (TCS) reported 9% growth in FY24 against an increase of 10% in FY23. The two largest IT firms — TCS and Infosys — account for 68% of the aggregate profit and close to 60% of the total revenue of the sample.

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Further, the revenue of these IT companies increased by 5% in FY24 to ₹6.8 lakh crore. In contrast, the six companies — TCS, Infosys, HCL Technologies, Wipro, Tech Mahindra and LTIMindtree — together had reported 19% growth in their top-line in FY23.

Vetri Subramaniam, Chief Investment Officer at UTI AMC, argues that the global picture is more tricky as there has been a very big shift in the kind of expectations for interest rate policy by the US Federal Reserve. According to him, one should watch out for management commentaries of these companies with respect to their growth strategy and hiring. “Tech capex spending in the US hopefully signals better times for the Indian IT sector,” said Subramaniam.

Even though TCS expects the current fiscal year will be better than the previous one, the second-largest outsourcing provider — Infosys has cut its FY25 revenue target to 1 % to 3% on a constant-currency basis. That was a revision from its earlier guidance of 4% to 7% a year ago due to prevailing weak demand in the sector.

Also Read: Alphabet in talks to acquire marketing software firm HubSpot

The gauge for IT stocks — the Nifty IT index has declined as much as 5.2% so far in 2024, against 3.2% gains generated by the benchmark Nifty50 during the same period.

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HCL Tech Q4: IT giant declares interim dividend of ₹18 per share, net profit at ₹3,986 crore

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

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IT services company HCL Technologies Ltd on Friday (April 26) reported a flat year-on-year growth in net profit for the fourth quarter that ended March 31, 2024. Its consolidated net profit for the fourth quarter was ₹3,986 crore compared with ₹3,983 crore in FY23.

Sequentially, the net profit declined 8.4% from ₹4,350 crore in the October-December period, according to the company’s filing and statement. CNBC-TV18 poll had predicted a profit of ₹4,084 crore for the quarter under review.

Pre-tax profit (EBIT) of ₹5,018 crore was down 10.6% quarter-on-quarter but up 3.8% as compared to the previous year. The company gave a guidance of 3-5% growth in revenue in constant currency terms for FY25 and an EBIT margin of 18-19%.

EBIT margin (pre-tax profit as a percentage of revenue) declined to 17.6% in the January-March period from 19.8% in the previous quarter and 18.1% a year ago. CNBC-TV18 poll had predicted an EBIT of ₹5,226 crore for the quarter under review. Employee cost rose 11.5% during the quarter while the attrition rate at 12.4% was lower than 19.5% in the fourth quarter of last year.

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For the March quarter, HCLTech’s revenue from operations stood at ₹28,499 crore, a 7.11% rise from ₹26,606 crore last year. For the entire FY24, HCL Tech reported a 5.73% rise in net profit to ₹15,702 crore. CNBC-TV18 poll had predicted revenue of ₹28,548 crore for the quarter under review.

In Q4 of FY24, HCL Technologies reported a rupee revenue of ₹28,499 crore, marking a marginal increase of 0.2% quarter-on-quarter and a 7.1% growth year-on-year.

Constant currency (CC) revenue, a crucial indicator accounting for currency fluctuations, exhibited a quarter-on-quarter uptick of 0.3% and a year-on-year rise of 6%. Similarly, USD revenue amounted to $3,430 million, reflecting a quarter-on-quarter increase of 0.4% and a year-on-year increase of 6.0%.

The services segment CC revenue climbed 3% quarter-on-quarter and 6.7% year-on-year. This growth was predominantly propelled by advancements in telecommunications, media, publishing, and entertainment verticals, which witnessed a remarkable quarter-on-quarter surge of 21.6% and a year-on-year expansion of 39.2%.

Additionally, digital services emerged as a key driver of revenue growth, contributing 37.1% to the overall services revenue and posting a commendable year-on-year growth rate of 6.3%. HCLSoftware reported an annual recurring revenue (ARR) of $1.02 billion, marking a year-on-year CC increase of 0.7%.

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The quarter witnessed significant traction in new deal wins, with total contract value (TCV) amounting to $2,290 million. Notably, HCL Technologies secured 21 new large deals, comprising 13 in services and eight in software.

In terms of workforce dynamics, HCL Technologies maintained a total people count of 227,481, with a net addition of 2,725 employees during the quarter. The company onboarded 3,096 freshers. There was a notable decline in the last twelve months’ (LTM) attrition rate, which stood at 12.4%.

The company’s board of directors has declared an interim dividend of ₹18 per equity share of ₹2 for the financial year 2024-25. The record date of May 7, 2024, fixed for the payment of the aforesaid interim dividend has been confirmed by the board of directors. The payment date of the interim dividend is slated to be May 15, 2024.

The results came after the close of the market hours. Shares of HCL Technologies ended at ₹1,476.80, down by ₹26.85, or 1.79%, on the BSE.

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

HCL Technologies to execute digital transformation for Finnish pharma distributor Oriola Corp

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

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HCL Technologies Ltd announced on Wednesday that Finland’s health and wellbeing company Oriola Corporation has selected it to enhance the organisation’s customer experience through digital transformation.

The Indian technology giant has entered into a partnership with Oriola Corporation to lead the acceleration of the company’s digital transformation journey and deliver improved customer experiences.

Headquartered in Finland, Oriola Corporation operates in the Nordic countries. As per the partnership deal, HCLTech will be implementing a greenfield SAP S/4HANA and analytics environment that will be hosted on Microsoft Azure.

The digital transformation, to be executed by HCL, will augment Oriola’s enterprise resource planning (ERP) and enterprise warehouse management (EWM) systems located in Sweden and Finland. Oriola will be able to transform and simplify its business operations using an agile, cloud-based ERP platform, which will also modernise its application stack and optimise the costs involved with operations of IT, according to HCL Technologies.

The project will help Oriola provide an improved system for responding to future customer and business requirements, while strengthening collaboration across the company, improving transparency and supporting the management of business in a cross-market operating model.

On the partnership, the Chief Digital Officer of Oriola, Mikael Nurmi said, “Through a common system, we will strengthen our processes and have access to common data, both of which will support us in serving our customers better.”

“We are delighted to participate in Oriola’s journey to becoming a forerunner in the advanced distribution of pharmaceuticals and in providing advisory services to pharmaceutical companies throughout product life cycles, while further growing our business in the Nordics region and across the life sciences and pharma sector globally,” said the Corporate Vice President of Europe and Africa, HCLTech, Pankaj Tagra in a press release on March 27.

Shares of HCL Tech traded 0.9% lower at ₹1,549.75 per piece on the BSE at 3 PM.

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

HCL Technologies collaborates with US IT firm CAST for offering customised chips

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

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HCL Technologies Ltd announced on Tuesday that it has expanded its partnership with the semiconductor intellectual property (IP) cores provider Computer Aided Software Technologies (CAST) Inc. for customised chips.

HCL Technologies and CAST have announced plans for scaling their partnership aimed at offering customised chips in order to help original equipment manufacturers (OEMs) accelerate their digital transformation as well as automation journeys across multiple industries.

As part of the expansion plans, the Indian IT major will enhance the design verification, emulation and rapid prototyping of the company’s turnkey SoC (system-on-chip), which will be done by leveraging silicon-proven IP cores and controllers from CAST, HCL Technologies informed the stock exchanges in a filing.

This will help OEMs across industries like automotive, consumer electronics and logistics, to significantly reduce their engineering risk and development costs, read a press release by HCL Technologies dated March 19.

serve its purpose for CAST across different industries, which will include automotive, consumer electronics and logistics, thereby significantly reducing not just their engineering risks but also development costs.

HCLTech and CAST, both have a decades-long heritage of delivering superior semiconductor SoC solutions to respective customers as well as partners, and working together would only enhance the efficiency, reliability, and user-friendly nature of semiconductor SoCs.

“CAST shares our vision for innovative, industry-leading electronic systems design. Their high-quality and well-supported IP cores, coupled with HCLTech’s system integration design expertise, will enable us to deliver superior custom chips to our customers worldwide,” stated the President of Engineering and R&D Services business of HCL Technologies, Vijay Guntur.

Shares of HCL Technologies were trading 2.11% lower at ₹1,608.70 apiece on the NSE at 2:36 pm.

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

HCL Tech partners with ServiceNow to deliver GenAI-led solutions

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

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HCL Technologies Ltd announced on Thursday that it has entered into a partnership with ServiceNow for the delivery of new generative artificial intelligence (AI)-driven solutions.

HCL Technologies and the leading American digital workflow company ServiceNow announced a partnership on Thursday to deliver new GenAI-led solutions. The collaboration will enable enterprises to adopt ServiceNow’s GenAI capabilities across their businesses efficiently and quickly, the company said in a filing to the stock exchanges.

As per this new global partnership, services like consulting, design and implementation will be provided by HCLTech through ServiceNow’s entire suite of products. This will be blended with the global technology major HCL Tech’s industry expertise, IPs and global delivery capabilities.

Enterprises, making use of the offerings led by the said partnership, will be able to realise cost savings and enhance cross-department efficiency as well as productivity.

A ServiceNow business unit called ‘Fluid NOW’ will be launched by HCLTech and ServiceNow in London, New York and Noida, which will aid enterprises in expanding the latest GenAI solutions which will accelerate their digital transformation journeys.

“We are delighted to double down on our partnership with ServiceNow to enable our clients to unlock value through GenAI. HCLTech’s differentiated portfolio and engineering heritage positions it to deliver practical and customized GenAI use cases to clients as they move forward with their digital transformation agendas,” stated the CEO and Managing Director of HCLTech, C Vijayakumar, in a press release dated March 7.

Shares of HCL Technologies were trading 0.5% lower at ₹1,635.9 apiece on the NSE at 2:25 pm.

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

Indian software exporters may have to grind for months before US business picks up

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

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Many software exporters in India cut their guidance after a weak quarter between October and December 2023. The pressure was visible in both revenue and profit margins.

However, the stocks have run up significantly in recent months. The Nifty IT Index is up over 16% since the close on October 26, 2023. Hope floats that clients will start spending again and the pinch of rising costs will ease.

Costs can be absorbed if the business picks up but not everyone is buying the optimism projected by the top CEOs in the IT space.

WATCH: Infosys CEO Salil Parekh says every client is looking at what generative AI can do for them 

As global broking firm CLSA puts it, “rubber will meet the road” when the companies like Infosys, Tata Consultancy Services (TCS), Tech Mahindra and Wipro reveal their next quarterly earnings.

While rating Infosys and Tech Mahindra at ‘outperform’, and giving a ‘sell’ call on Wipro and LTIMindtree, CLSA said that there is a downside risk to its estimate due to business uncertainties that may emerge from the impending US election in November.

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US accounts for more than half the revenue for almost all IT companies in India, and the odds of a mid-year recession in the world’s biggest economy are still significant.

Companies like Infosys and TCS have cited the growing opportunity in the use of generative artificial intelligence but analysts are still cautious about how the revenue potential in the near term.

Citing the example of product engineering company, EPAM, which gave a growth guidance of 1-4% for 2024 —  despite a favourable base effect due to a 2.6% annual decline in 2023 — CLSA has inferred that the revenue growth hasn’t hit the worst yet. 

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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

HCLTech had a sixer of a quarter, says chief financial officer Prateek Aggarwal

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

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HCLTech shares rose in early trade on January 15 but were off the opening high, following the best October to December quarter result among peers. Beating CNBC-TV18 poll estimates on all fronts, the IT services giant said it had had a “sixer of a quarter.”

In an exclusive interaction with CNBC-TV18, HCLTech’s Chief Financial Officer Prateek Aggarwal said the growth in the quarter was led by three factors — solid outperformance by the software division, mega Verizon deal and German automotive engineering services company ASAP acquisition.

Aggarwal’s remarks come after the company’s software division saw a growth of 32% on a sequential basis and 5% on a year-on-year basis.

A major part of the services growth was driven by the ramp-up of the mega Verizon deal and ASAP acquisition, both of which contributed to the topline for two months in the third quarter of the financial year, Aggarwal said. He said the firm expected the Verizon deal to contribute one incremental month in the January to March 2024 quarter as well.

During the quarter under review, HCLTech recorded $3.8 billion worth of order booking with 14 large deal wins, the firm said.

Meanwhile, Aggarwal said the services business needs to deliver 1.6-3.5% growth in the March 2024 ending quarter to meet guidance. Overall, HCLTech has given revenue guidance in the range of 5.0% and 5.5%.

Also Read: HCL Tech shares jump 4% as Q3 earnings beat Street estimates. Should you buy?

In the December quarter, the services revenue witnessed a growth of 3.1% quarter-on-quarter and 4.2% year-on-year. The growth was primarily driven by the telecommunications, media, publishing, and entertainment sectors.

Also, the services revenue surpassed an annual run rate of $12 billion (₹1,00,000 crore), underscoring the company’s sustained momentum and strong market presence.

The HCLTech management also noted that its banking, financial services and insurance (BFSI) revenue decline in the third quarter was on account of furloughs. In the current quarter, the firm expects lower furloughs compared to the December quarter which is likely to aid growth.

Also Read: HCL Technologies adds 3,818 freshers in Q3, attrition rate at 12.8%

Aggarwal also attributed the 50 basis points decline in the margin to wage hikes during the quarter.

HCLTech’s Chief People Officer Ramachandran Sundararajan, however, added that the firm sees increases in compensation even though attrition and hiring activity have come down in the industry. As against most of its peers, HCLTech also expects increased hiring in the market given the demand uptick.

The firm foresees net headcount addition in the fourth quarter. This is in contrast to Tata Consultancy Services (TCS) management’s commentary. TCS has said they won’t be surprised if the strength sees a net reduction in the March 2024 quarter as well.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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

HCLTech shares jump 4% as Q3 earnings beat Street estimates. Should you buy?

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

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Shares of HCL Technologies climbed nearly 4% to hit a day’s high of ₹1,619.60 on the NSE after the brokerages remained upbeat on the IT consulting company following its third quarter results wherein it reported strong all-round quarter with revenues and EBIT margin well ahead of estimates.

However, it seems that investors were not convinced about the numbers despite it seemingly appearing to be a pretty big beat. Global brokerage CLSA has downgraded the HCLTech stock to ‘Underperform’ from ‘Outperform’, despite raising the target to ₹1,536 per share. It said the average stock return over the past five years has been flat.

CLSA said that bunching up of multiple catalysts led to a strong beat but they see weak sequential growth in the next quarter and the quarter followed.

Ambit said that qualitatively the numbers are better than peers but valuations of HCLTech keep them at bay. Valuations are at 24.9 times forward multiple, and 84% premium to pre-Covid three-year average.

Though Ambit has a ‘Sell’ call on HCLTech with a target price of ₹1,360, the brokerage prefers the company over Infosys and TCS. HCLTech will likely outperform peers on cloud demand and ER&D recovery, but absolute growth largely at pre-Covid levels, it said.

Analysts at Morgan Stanley maintains an ‘Equal weight’ rating on the stock but raised their target price to ₹1,600 per share from ₹1,470, highlighting the company’s superior third quarter performance and notable beats in services business and EBIT margins.

HCLTech reported better-than-expected earnings for the quarter ended December, on the back of strong growth in the services and software business. Its consolidated net profit rose 13.5% sequentially to ₹4,350 crore in the December quarter, and revenue grew nearly 7% to ₹28,446 crore.

In constant currency terms, HCLTech’s revenue grew 6% sequentially in the quarter.

Narrowed FY24 revenue guidance

Despite good numbers in the third quarter, HCLTech has trimmed its guidance for the current financial year.

The company’s management has narrowed the FY24 revenue guidance to 5%–5.5% year-on-year in constant currency from 5%-6% and maintained the margin guidance of 18%–19%. The management expects a solid fourth quarter and continued momentum in FY25.

HCLTech’s performance in the third quarter was decent and guidance largely intact, which should make it the fastest-growing largecap in FY24, according to Nuvama Institutional Equities. Its decent growth in services and lower exposure to the troubled BFSI (23%) segment imply high probability of stable earnings growth, it said.

“A high dividend yield and inexpensive valuation provide a floor to the stock price. We see Q3FY24 to be the bottom for the earnings downgrade cycle for HCL and the sector,” the brokerage said while maintaining a ‘Buy’ on the stock and a target of ₹1,780 from ₹1,700 earlier.

Misses the mark in deal signings

Net new deal total contract value (TCV) of $1.9 billion declined 18% on-year and was soft. Barring $2.3 billion of Verizon deal, TCV in 9MFY24 has been muted. The management indicated a healthy pipeline and will be a key monitorable.

Domestic broking firm Kotak broadly maintains its FY2024-26 earnings per share (EPS) estimates on the back of an increase in margin assumptions. “We cut FY2025 revenue assumptions due to sluggish industry-wide discretionary spending,” it said while raising its target to ₹1,650 from ₹1,600 per share earlier. The brokerage has an ‘Add’ rating on the counter.

“We are impressed with HCLTech’s execution. Multiple years of investments in digital have allowed HCLT to have a balanced portfolio of business and drive consistent growth,” Kotak noted.

After a strong 44% increase in stock price in the past 12 months, returns will be moderate hereon, according to Kotak.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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

HCL Technologies adds 3,818 freshers in Q3, attrition rate at 12.8%%

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

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IT services company HCL Technologies’ total headcount at the end of the October-December quarter stood at 2.24 lakh. The company has added 3,617 employees during the third quarter, the firm’s earnings statement showed on January 12.

The Noida-headquartered company also hired 3,818 freshers during the quarter under review. In the previous quarter, the company added 3,630 employees.

HCL Tech also saw attrition ease to 12.8%, down from 21.7% in the same quarter of last year.

HCL Tech reported that its consolidated net profit rose 6% year-on-year to Rs 4,350 crore for the quarter ended December 2023. It was Rs 4,096 crore in the year-ago period.

Revenue from operations also increased 6% in the said period to Rs 28,446 crore.

HCL Tech expects its constant currency (CC) revenue growth to be around 5-5.5% in the fiscal year 2024, while EBIT margin is estimated between 18 and 19%.

Consolidated EBIT jumped 7% year-on-year to Rs 5,615 crore in the quarter under review.

In CC terms, revenue was up 4% year-on-year in the third quarter and revenue growth in dollar value stood at 5% YoY.

HCL Tech has bagged new deal wins worth $1.9 billion in the third quarter, including 18 large ones.

The Board of Directors has declared an interim dividend of Rs 12 per equity share and fixed January 20 as the record date for the same. The payment date of the said interim dividend will be January 31.

Shares of HCL Technologies settled 4.65% higher at Rs 1,553.90 per share on Friday. The stock has risen 6.30% so far this year.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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

HCLTech reports ransomware incident in an isolated cloud environment, probe underway

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

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HCLTech shares will be in focus on December 20 as the IT services firm reported that a ransomware incident has been recorded in an isolated cloud environment for one of its projects. The firm said there has been no impact observed due to this incident on the overall network.

“Cybersecurity and data protection is a top priority for HCLTech. A detailed investigation is underway in consultation with relevant stakeholders to assess the root cause and take remedial action as necessary,” the company said in an exchange filing.

HCLTech, among other IT stocks, will also be in focus since global peer Accenture reported its quarterly result on December 19, which is an indicator of how the domestic earnings season is likely to be for the tech services companies.

IT services provider Accenture forecast second-quarter revenue below Wall Street targets, anticipating cautious spending by clients as macroeconomic uncertainty remains an overhang. Accenture expects revenue in the range of $15.40 billion to $16.00 billion. Analysts polled by LSEG had forecast revenue of $16.29 billion.

According to brokerage firm Morgan Stanley, Accenture’s weaker-than-expected Q2 guidance offset an in-line to slight beat on the first quarter revenue. Also, incremental concerns in the UK, no and change to its discretionary spending outlook offset an in-line to slight beat on Q1 revenue, the brokerage said.

HCLTech shares ended the December 19 session more than a percent lower at ₹1,488.15. So far in 2023 (year-to-date), the stock has given a return of more than 43% to its investors as against benchmark Sensex which has risen nearly 19% during the period.

Also Read: This underperforming IT stock may see more downside due to grim Q3 earnings outlook

On December 19, Kotak Institutional Equities downgraded HCLTech to ‘add’ from ‘buy.’ “Rollover to December quarter and 2X increase in multiple factoring in lower macro uncertainty following rate cut path laid out by US Fed lead to 9-16% increase in FVs for IT stocks. We cut the rating on HCLT to an ADD from BUY following a 13% stock price increase in the past month,” the brokerage firm said.

Meanwhile, on December 17, Citi gave a neutral call on the firm with a target price of ₹1,295. The New York-based brokerage said it was difficult to call out when the demand situation would improve and that there is hardly any budget flush. It noted that furloughs are higher than any of the previous two years. According to the firm, the medium-term growth outlook remains low double-digit growth.

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Also Read: India’s top 5 IT firms lose over 21,800 employees in a quarter — When will tech hiring pick up?

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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