HCL Technologies Q2 Results Net Profit Surges 11% to Rs 4,235 Crore, Exceeds Expectations – Dividend Announced
HCL Technologies Ltd, one of India’s leading IT service providers, reported a significant financial performance for the second quarter of FY25 on October 14, 2024. The company’s net profit surged by 11% year-on-year, reaching Rs 4,235 crore, compared to Rs 3,832 crore in the same quarter last year. This performance not only marks a notable increase but also exceeds market expectations, showcasing HCLTech’s robust operational efficiency and strategic growth initiatives.
Main Points
Financial Performance
During the July-September quarter, HCLTech’s revenue from operations rose by 8.21%, amounting to Rs 28,862 crore, up from Rs 26,672 crore in the corresponding period last year. Analysts had anticipated a more modest growth rate, with projections estimating revenue around Rs 28,550 crore. HCLTech’s performance clearly outstripped these forecasts, reinforcing its position as a strong player in the competitive IT landscape.
The company’s profit after tax (PAT) was notably higher than the consensus estimate of Rs 4,024 crore, reflecting effective cost management and an increase in demand for its services. The earnings before interest and taxes (EBIT) margin improved to 18.6%, indicating a solid operational performance across various sectors.
Dividend Announcement
In light of its impressive financial results, HCLTech declared an interim dividend of Rs 12 per share. This brings the total interim dividend for the fiscal year to Rs 42 per share. The record date for this dividend is set for October 22, 2024, with payment scheduled for October 30, 2024. This move is expected to enhance shareholder value and reflects the company’s commitment to returning profits to its investors.
Sector Performance
HCLTech’s growth was driven by several key sectors. The Telecommunications, Media, Publishing, and Entertainment segment saw a remarkable growth of 61.2% year-on-year. Other sectors that contributed positively include manufacturing (7.1%), retail and consumer packaged goods (6.2%), and technology and services (5.6%). However, the Banking, Financial Services, and Insurance (BFSI) sector experienced a decline of 4.5%, which could be attributed to ongoing market adjustments.
Future Outlook
Looking ahead, HCLTech has raised its revenue growth guidance for FY25 to between 3.5% and 5% in constant currency terms. This adjustment indicates confidence in continued demand for IT services amid evolving market conditions. CEO C Vijayakumar highlighted that the company’s pipeline remains strong with opportunities in areas such as Data & AI, Digital Engineering, and SAP migration.
The total contract value (TCV) from new deals stood at approximately $2.2 billion, reflecting an increase from $1.96 billion in the previous quarter. This growth in contract value suggests a healthy demand for HCLTech’s service offerings.
Workforce Dynamics
Despite the positive financial results, HCLTech reported a slight reduction in its workforce by 780 employees, bringing the total headcount to approximately 218,621 at the end of Q2 FY25. The company added 2,932 freshers during this period, indicating ongoing investment in talent acquisition despite overall attrition rates standing at 12.9%, down from 14.2% in the previous year.
Market Reaction
Following the announcement of these results, HCLTech’s shares traded positively on the stock market, closing up by approximately 0.89% at Rs 1,856 per share prior to the earnings release. These results underscore HCL Technologies’ resilience and adaptability in a challenging economic environment while continuing to focus on innovation and customer satisfaction.
