HCLTech reports 11% jump in Q4 net profit, pegs guidance at 6-8%

Revenue for the quarter grew 17.7 per cent YoY at Rs 26,606 crore, although revenue growth was flat sequentially. After the disappointing results from the country’s two largest players — Tata Consultancy Services (TCS) and Infosys — HCLTech managed to defy the odds.

The company guided for a revenue growth range of 6-8 per cent in constant currency (CC). It expects its services revenue growth to be in the range of 6.5-8.5 per cent in CC terms. The growth expectation is much lower than what the company clocked in 2022-23 (FY23).

Vijayakumar also attributed the quarter’s better performance to the company’s exposure to small and regional banks in the US being less than 1 per cent. He, however, said that the telecommunication and technology verticals would see pressure.

HCLTech also declared an interim dividend of Rs 18 per equity share on Thursday. This would be the first dividend for FY24.

“HCLTech guided for FY24 estimated CC US dollar sales growth guidance of 6-8 per cent. This is better than our expectation, considering Infosys’ guidance of 4-7 per cent. The management stated that booking delays and deal ramp-ups are only in the discretionary space, while cost optimisation and transformation initiatives in others continue. Deal bookings are showing slight moderation, while client additions stayed strong during Q4. Net headcount addition improved with decent fresher addition. The stock offers reasonable risk/reward for investment. We have a ‘buy’ rating on the stock,” said Sanjeev Hota, head-research, Sharekhan by BNP Paribas.

After the Infosys shocker, analysts expected HCLTech to spring a nasty surprise, but it managed to put on a better show.

“After two major misses in TCS and Infosys, the Street was expecting another disappointment from HCLTech. The company, however, surprised pleasantly us as the Q4 results came out in line with expectations. There was a mild miss in revenue. However, the profits came out a little better than expected, aided by growth in other income. Overall, its revenue was down 0.3 per cent quarter-on-quarter (QoQ). However, its services business grew 0.6 per cent QoQ. The guidance of 6-8 per cent in CC for FY24 is good and so is the margin guidance of 18-19 per cent,” he added.