HCL Tech Q2 Results Highlights: Net profit rises 10% to Rs 3,832 crore, revenue up 8%; FY24 guidance revised

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HCLTech’s net headcount addition has declined by 2,299 in the second quarter ended September 30 for the fiscal year 2024, as the company is focussing on improving utilisation rates to maintain operating margin guidance amidst a tough business environment.

Fresher addition for the quarter stood at 3,630, up from last quarter’s 1,597. Total headcount stood at 221,139.

This is the second consecutive quarter of headcount decline for HCLTech

There's no business impact in Israel. We have about 100 employees there: CMD Vijayakumar amid Hamas strikes

FY 24 guidance revised 5-6% YoY in CC terms. Previously it was 6-8%.

Ramachandran Sundararajan, chief people officer, HCLTech: We will be going with pay revision from October onwards. Mid- and senior management won’t take pay hikes in FY24. 90% of the workforce will be eligible for pay hike revision.

Fresher hiring target of 10,000 for FY24. Continue to go for campus placements: Sundararajan

-People Count at 221,139
- Added 3,630 freshers
-LTM Attrition at 14.2% (down from 23.8% in Q2 of last year)

• Company Organic Revenue growth expected to be between 4.0% and 5.0% YoY in CC
• Services Organic Revenue growth expected to be between 4.5% and 5.5% YoY in CC
• Company Revenue growth (including ASAP acquisition) expected to be between 5.0% and 6.0% YoY in CC
• EBIT margin expected to be between 18.0% and 19.0%

"Q2 FY24 growth at 8% YoY (in INR) is accompanied with sharp uptick in margins and deal wins, as well as great cash generation. EBIT margins increased to 18.5%, an increase of 50 bps YoY,154 bps QoQ. Profit After Tax (PAT) came in at 14.4%, an increase of 30 bps YoY. EBIT was up 11.5% YoY and PAT was up 9.8% YoY. Last Twelve Months (LTM) ROIC for the company stood at 32.2% (up 350 bps YoY) and 39.4% (up 320 bps YoY) for Services business. Cash generation accelerated with LTM OCF US$ 2,820 Mn (151% of PAT) and FCF at US$ 2,662 Mn (142% of PAT)."

"I am pleased to share that we continue to execute well in a challenging business environment. We are also expanding our global sustainability agenda with the launch of HOLTech Grant Americas to combat climate change."

"Our revenue growth of 1.0% QoQ and 3.4% YoY on a constant currency basis, with a 154 bps QoQ improvement in operating margin and improving cashflows, reflect our ability to execute well in an evolving business environment and our commitment to operational efficiency. Our new bookings of US$ 4 Bn this quarter is at an all-time high, driven by a standout mega deal. This achievement underscores our ability to seize exceptional opportunities in the market and gives us optimism for our medium-term growth prospects."

HCL Tech approves interim dividend of Rs 12 per share, fixes October 20 as record date

IT services company HCL Tech reported a 10 percent rise in its consolidated net profit at Rs 3,832 crore for the quarter ended September 30, 2023, in-line with estimates.

According to analysts, the Noida-based company was likely to report a sharp recovery in revenue growth and net profit growth even amid a slowdown in tech spending.

Revenue from operations grew 8 percent to Rs 26,672 crore in the quarter under review from Rs 24,686 crore in the corresponding period last year.

--Large deals was the highest ever for us at 7.7 bn USD

--Large and mega deal wins help us build a strong foundation for our future

--Discretionary and large transformation programmes have slowed significantly

- IT major Infosys on October 12 announced a five-year extension of its successful joint venture with Temasek, a global investment company headquartered in Singapore.

- “Based on the recommendation of the audit committee, considered and approved a five-year extension of its successful joint venture collaboration with Temasek, a global investment firm headquartered in Singapore,” the company said in a filing to the exchanges.

- All our employees in Israel are safe, says management.

- Nearly all of them are locals, they added.

- Strong quarter, weak guidance

- Revenue growth guidance of 1.0-2.5% for FY24

- Revenue above estimates

- Margins in line

- Headcount down by 7500

- Large deal TCV at $7.7 Billion

- Wage hikes effective Nov 1

- Nitin Paranjpe joins the board

- Infosys reports a 3% YoY rise in net profit in Q2FY24; here are the key highlights

- Large and mega deal wins help us build a strong foundation for our future

- Discretionary and large transformation programmes have slowed significantly

- IT major Infosys saw it headcount shrinks by 7,530 in Q2, third consecutive quarter of decline

- Attrition for the quarter continued its downward trend and came in at 14.6 percent, from last quarter’s 17.3 percent on a last-twelve-month basis.

- As the talent market cools off, attrition rates have continued to normalise further.

- Infosys forecast full-year revenue growth at 1%-2.5% on a constant currency basis, compared to its prior view of 1%-3.5%.

- HUL's Nitin Paranjpe appointed as independent director of Infosys

- Infosys approved a five-year extension of its successful joint venture collaboration with Temasek

- Upper end of the cc revenue growth guidance cut from 3.5% to 2.5%

- Constant currency revenue growth guidance revised to 1-2.5%

- “We had our highest large deals value at $7.7 billion in Q2 spread across all verticals and geographies," said Infosys CEO & MD Salil Parekh.

- "This, in an uncertain macro-environment, is a testament to our ability to pivot and stay relevant to the evolving client needs, by delivering the benefits of transformation as well as productivity and cost savings at scale”, Parekh added.

- IT major Infosys reported better-than-expected net profit for Q2 of FY24 at Rs 6,212 core. Revenue grew 7 percent at Rs 38,994 core.

- Interim dividend declared Rs 18 per share for FY24

- Infosys is expected to reiterate its FY24 growth guidance of 1-3.5 percent YoY in constant currency (CC) terms and margin guidance of 20-22 percent.

- IT major Infosys will declare its September quarter results shortly.

- At closing bell, shares of IT major Infosys were at Rs 1,452.30 apiece, down almost 3 percent on October 12.

- Besides that, the company's earnings before interest and tax (Ebit) margin is likely to decline 20 basis points (bps) YoY to 21.3 percent in Q2FY24 from 21.5 percent in Q2FY23.

- Shares of Infosys at 3pm.

- Infosys partnered with Microsoft to accelerate and democratise industry-wide adoption of generative artificial intelligence (AI).

- The company also collaborated with NVIDIA to boost productivity with generative AI on September 20, 2023.

- Analysts at Elara Securities, in their Q2 preview report pegged the deal momentum in the September-ended quarter to be led by the banking, financial services and insurance (BFSI) and communications segment.

- Infosys shares were trading at Rs 1,480.60 apiece, down almost 1 percent.

- Key areas to watch include the performance of impacted verticals like ER&D, tech, and telecom

- The FY24 revenue and margin outlook.

- The risk of macroeconomic headwinds on demand and demand outlook.

- The outlook on services and Products and platforms segments.

- Investments in GenAI partnerships and solutions; and the timeline of large deal win ramp-ups and pipeline.

- Shares of HCL Technologies at 1:15 pm.

- The mean of earnings before interest tax (EBIT) margin estimates for HCL Tech in July-September quarter stands at 21.4 percent, reflecting a 91 basis points sequential expansion attributed to operational efficiencies.

- Recently, HCL made a major announcement regarding its wage hike cycle.

- The IT major decided to skip the wage hike for mid-level and senior employees.

- Additionally, the wage hike for junior employees has been pushed to the October-December quarter of the current fiscal year.

- This strategic decision indicates an approach aimed at managing costs and aligning with the evolving business landscape.

- Analysts and domestic brokerages widely expect HCL Tech, India's third largest IT services major, to report softer growth in the September quarter and reduce its revenue guidance to 4-6 per cent from 6-8 percent.

- HCL Tech's profit after tax (PAT) for the July-September quarter is expected to increase by 6.14 percent quarter-on-quarter to Rs 3,750 crore, as per the average of estimates from five brokerages.

- Revenue is likely to grow 2.3 percent quarter-on-quarter to Rs 26,909 crore.

- HCL Technologies' shares were trading at Rs 1,240.10 apiece, down 0.62 percent.

- HCL Tech's profit after tax (PAT) for the July-September quarter is expected to increase by 6.14 percent quarter-on-quarter to Rs 3,750 crore, as per analysts.

- In the first quarter, Infosys observed a reduction in total headcount by 6,940 employees, declining from 3,43,234 in Q4 to 3,36,294.

- Furthermore, voluntary attrition for the quarter decreased to 17.3 percent. The company's management had earlier highlighted that the hiring outlook would be influenced by shifts in the demand landscape and attrition rates.

- The forthcoming announcement regarding a potential salary hike, which has faced delays, will be closely monitored.

- Additionally, investors will be keen on understanding if the recent substantial order wins will have an impact on the margins of the IT firm led by Salil Parekh in the future.

- These aspects are crucial factors that investors and stakeholders are interested in, as they provide insights into the company's financial strategies, employee engagement, and overall growth trajectory.

- Nuvama Wealth Management expects Infosys' revenue for the second quarter of FY24 will witness a growth of 1.2 percent quarter-on-quarter (QoQ) in cc and 1 percent QoQ in USD terms.

- In terms of profitability, they expect net profit to increase by 8 percent QoQ, with EBIT (Earnings Before Interest and Taxes) likely to rise by 2.3 percent.

- Shares of Infosys were at Rs 1,484.15, down 0.69 percent.

- Infosys is expected to reiterate its FY24 growth guidance of 1-3.5 percent YoY in constant currency (CC) terms and margin guidance of 20-22 percent.

- As per an average estimate of five brokerages, Infosys is expected to see a marginal revenue decline of 0.6 percent quarter-on-quarter (QoQ) to Rs 37,694 crore in Q2FY24 due to weak discretionary spends and slower deal ramp-ups.

- Analysts see muted revenue growth of 0.8 percent in CC terms for Infosys due to the demand slowdown and lack of a meaningful contribution from recently signed mega deals.

- The global brokerage firm forecasts revenue growth to remain soft at 1 percent QoQ in constant currency (CC) terms to $4,555 million—in line with the previous quarter, owing to continued weakness in discretionary spends while deal ramp-ups help absorb some impact of the revenue leakage.

- Infosys' profit-after-tax (PAT) is projected to grow 2.2 percent YoY and 3.5 percent QoQ to Rs 6,156 crore in the quarter ended September, said analysts.

- Shares of Infosys were trading at Rs 1,482.90 apiece, down 0.82%

- So far this year, the Infosys stock has declined 1 percent as against an 8 percent rise in the S&P BSE Sensex.

- On a year-on-year (YoY) basis, Infosys’ revenue is forecast to grow 3 percent, whereas net profit is estimated to grow at 2.2 percent, per the average estimate of five brokerages.

- Analysts believe that continued rationalisation of discretionary programmes, along with extended timelines for execution of existing ones is leading to the leakage of revenues and weak trends.