HCL Tech Q3 net up 31% to Rs 3,982 cr; Confident of further acceleration in business in coming qtrs

HCL Technologies on Friday posted a 31.1 per cent rise in its December quarter net profit at Rs 3,982 crore on the back of strong momentum in its digital, products and platform segment, and exuded confidence in clocking further acceleration in bookings in the coming quarters.

The IT services major, which had registered a net profit of Rs 3,037 crore in the year-ago period, has also crossed the USD 10 billion revenue milestone in CY2020.

HCL Tech's revenue grew 6.4 per cent to Rs 19,302 crore in the quarter under review, from Rs 18,135 crore in the year-ago period (as per US GAAP).

The company recorded revenue growth at 3.5 per cent quarter-on-quarter in constant currency, beating its own estimate of 1.5-2.5 per cent growth for the December quarter.

HCL Tech has now revised its sequential revenue growth guidance to 2-3 per cent (including DWS contribution) in constant currency from its previous estimate of 1.5-2.5 per cent increase quarter-on-quarter for the March 2021 quarter.

''The calendar year 2021 has started on a very strong financial note. Our strategic bets continue to deliver outstanding results as reflected in our sequential revenue growth of 3.5 per cent in constant currency and 4.4 per cent in US dollars,'' HCL Technologies President and CEO C Vijayakumar said.

The company continues to see a strong pipeline and remains confident of ''even further acceleration of bookings in the coming quarters'', he added.

''Looking ahead, a combination of a strong pipeline, good order booking gives us a lot of optimism about the growth trajectory. I strongly believe that we are uniquely differentiated through a combination of solutions and services...'' he said.

HCL Technologies' revenue has crosses USD 10 billion milestone in CY20, delivering 3.6 per cent year-on-year growth in constant currency.

Vijayakumar said the July-December period of FY21 -- which constitutes the first two comparison quarters since the closure of the IBM deal -- registered a y-o-y growth of 13.4 per cent.

HCL Tech had acquired select IBM software products for Rs 12,252 crore (about USD 1.8 billion).

''While it is early days, this is the fastest growing business from a year-on-year perspective for HCL and probably in the industry as well... Our geographic performance was led by Europe... In terms of verticals, five of the seven verticals showed good positive growth momentum. It was led by media and telecom,'' he added.

On a sequential basis, net profit was 26.7 per cent higher from Rs 3,142 crore, while topline was higher by 3.8 per cent from Rs 18,594 crore in September 2020 quarter.

Vijayakumar said the uptick in net income was on account of lower tax expense, primarily due to reversal of tax provisions related to prior years, and a couple of other factors.

The Board of Directors has declared an interim dividend of Rs 4 per equity share for the financial year 2020-21. Shares of HCL Technologies were trading at Rs 1,011.1 apiece, down 1.62 per cent from the previous close on BSE.

''HCL Tech reported impressive quarterly performance, beating our estimates on all fronts. Constant currency revenue grew 3.5 per cent q-o-q, driven by strong growth in all its segments (especially in products and platforms segment)... We expect increase in FY2021-23E earnings for HCL Tech factoring in current quarter outperformance, upward revision of guidance and consistent mega deal wins,'' Sharekhan by BNP Paribas Head of Research Sanjeev Hota said.

During the quarter, HCL Technologies signed 13 transformational deals across industry verticals, including Life Sciences and Healthcare, Technology and Financial Services. The company saw broad-based growth driven by Digital (Mode 2) and Products and Platforms (Mode 3).

At the end of December 2020 quarter, HCL Technologies had 159,682 employees with net addition of 6,597 people, while attrition for IT services (on last 12 month basis) was at 10.2 per cent.

''Our localisation in the US has gone up by almost 300 basis points, we have 69.8 per cent now. Though there was a bit of a difficulty in hiring freshers during quarter 1 and 2, we accelerated our fresher hiring and in the December quarter, we added 4,022 freshers, which has brought our onboarding of freshers to 6,480 by December, and we plan to add another 5,000 in in March quarter,'' HCL Technologies Chief Human Resources Officer Apparao VV said.