Indian IT services major HCL Technologies reported a decline in its consolidated net profit for the third quarter of the current financial year. The company's profit saw a drop, even as its revenue managed to post a modest increase.
Quarterly Financial Performance at a Glance
For the quarter that ended on December 31, 2023, HCLTech's consolidated net profit stood at Rs 4,076 crore. This figure represents a decrease of approximately 11% compared to the net profit of Rs 4,466 crore recorded in the same period last year, the October-December quarter of the 2022-23 financial year.
On the revenue front, the company witnessed growth. The consolidated revenue from operations for Q3 FY24 reached Rs 28,446 crore. This marks an increase of about 6% from the Rs 26,700 crore revenue reported in the corresponding quarter of the previous fiscal year.
Management Commentary and Revised Guidance
The company's leadership acknowledged the mixed results in a seasonally weak quarter. HCLTech's CEO and Managing Director, C. Vijayakumar, provided insights into the performance, highlighting the growth in certain segments despite broader challenges.
In a significant move, HCLTech revised its full-year guidance for the 2023-24 financial year. The company now expects its revenue growth to be in the range of 5% to 5.5% in constant currency terms. This is a revision from its earlier forecast, which anticipated growth between 5% and 6%. The company maintained its operating margin guidance at 18% to 19%.
The management pointed to a slowdown in the telecom and financial services sectors as key factors impacting the performance. However, they also noted strength in areas like engineering and research & development (ER&D) services.
Operational Metrics and Future Outlook
In terms of deal wins, a critical indicator of future revenue, HCLTech reported signing new contracts with a total contract value (TCV) of $1.9 billion for the December quarter. This represents a slight decrease from the $2.4 billion worth of deals signed in the preceding September quarter.
The company's headcount saw a reduction during the quarter. The total employee strength decreased by 3,617, bringing the number down to 224,756 employees. The attrition rate, which measures the rate at which employees leave the company, continued its declining trend, falling to 12.8%.
Looking ahead, the management expressed cautious optimism. They emphasized their focus on leveraging emerging technologies like artificial intelligence (AI) and cloud services to drive future growth. The company aims to navigate the current macroeconomic uncertainty by maintaining cost discipline and investing in high-potential service areas.
The announcement of the quarterly results was made to the stock exchanges on Friday, January 12, 2024. The financial markets will be closely watching the company's strategy to improve profitability in the coming quarters amidst a challenging global demand environment for IT services.
