HCL Q4 Result: Profit soars 226% on year, beats estimates
Profit beats estimates: HCL Tech has reported a 4.2% on quarter increase in its net profit to Rs 3,593 crore. On a yearly basis, net profit jumped 226% from Rs 1,102 crore from the last fiscal quarter. The analyst had earlier estimated a profit of Rs 3350 crore.
HCL Results: Summary in brief
Robust revenue growth: HCL Tech’s revenue grew marginally QoQ from Rs 22,586 crore to Rs 22,597 in constant currency terms. On YoY, the revenue increased by 15.05%, the revenue in the year-ago period was Rs 19,641 crore. Services business has grown at 5.0% QoQ in the March quarter. Engineering and R&D Services grew at a robust 3.9% QoQ (23.7% YoY) driven by traction in digital engineering and IoT Works. IT and Business Services grew at a healthy 5.2% QoQ (16.2% YoY), driven by an acceleration in cloud transformation and application modernization deals.
Margins: HCL Tech’s EBIT margin was at 18.0%, a decline of 4.4% sequentially. EBITDA margin stood at 22.4%, a decline of 6.3%. Net Income Margin for the quarter was 15.9% which was 44 bps higher, sequentially. Free Cash Flow (FCF) increased 29.3% QoQ at $685 million. Gross Cash stands at $ 2,914 million and Net Cash at $ 2,388 million.
Strong Guidance: The company has given a good guidance number for FY23. In the constant currency term, the company is expected to grow in double digits for FY23. Revenue is expected to grow between 12% and 14%. The forecasted EBIT margin is between 18% and 20%.
HCL Tech Q4 Results 2022
New Contract and large deals: The company won new contracts worth US$ 2,260 million registering 6% QoQ growth. On YoY basis, $100 mn+ clients are up by 1, $50 mn+ clients are up by 8, $20 mn+ clients up by 22, $10 mn+ clients up by 30, and $5 mn+ clients up by 31, $1 mn+ clients up by 73.
Dividend: The company has declared an interim dividend of Rs 18 per share for Q4. This is the 77th consecutive quarter of dividend payout by the company. The Record date has been fixed as April 29, 2022 and the Payment date of the said interim dividend shall be May 11, 2022.
Hiring and Attrition: The company has hired 11,100 professionals in the Q4FY22, up 5.6%. The total headcount of the company now stands at 208,877. The attrition rate has increased from 19.8% in the last quarter to 21.9% for the quarter ended March.
Acquisition: HCL Technologies signed a definitive agreement to acquire Starschema, a leading provider of data engineering services, based in Budapest, Hungary. The acquisition was completed effective April 2, 2022. The strategic acquisition bolsters HCL’s capability in digital engineering driven by data engineering and increases its presence in Central and Eastern Europe.
Management commentary: The company said, "Over the last three quarters, our Services business has been consistently growing organically at 5% and higher, delivering one of the highest CAGR in the industry. Our overall growth on YoY basis stands at 12.7% which is better than the guidance led by strong momentum in Digital, Cloud and Engineering services. We continue to invest proactively to create a larger talent pool to address the demand."
HCL share price closed 1.18% higher at Rs 1,102.30 per share.
HCL results: Review
HCL Tech has reported a strong set of numbers for the quarter ended March-22, aided by strong growth across business. While the company was able to beat estimates on net profit, the revenue was largely in-line with estimates.The company continued to witness strong deal wins. TCV of New Deal wins came in at US$ 2,260 mn for Q4, registering 6% QoQ growth. 10 Net New deal wins in Q4. The company has delivered a healthy performance across its services portfolio led by Digital Business, Engineering and Cloud Services.
The company has a robust pipeline of projects, and continued strong employee ramp-up gives the company the required growth momentum. Shares of HCL Tech ended 1.2% higher at Rs. 1,099 on the NSE.