HCL Tech Q4 profit grows 15.3% to Rs 2,568 cr; announces dividend of Rs 2

HCL technologies has registered a net income of Rs 2,568 crore, up 15.3 percent year-on-year for the quarter ended March 31, 2019. The profit fell 1.7% sequentially though.

The net revenue for the quarter grew 21.3 percent YoY to Rs 15,990 crore over the comparable quarter the previous year.

For the whole year (FY19), the company's revenue grew 19.5 percent to Rs 60,427 crore YoY. The net income for FY19 stood at Rs 10,123 crore, a growth of 15.3 percent over the previous fiscal.

For FY20, the company has increased its revenue guidance from 9.5 -11.5 percent to 14-16 percent in constant currency. The company expects operating margin (EBIT) to range from 18.5 percent to 19.5 percent.

The company expects to reach $10 billion revenue mark in FY20.

At the growth of 11.8 percent in constant currency, the company has exceeded its upper end of the guided range of 9.5-11.5 percent. For the full year FY19, Mode 2 grew at solid 28.7 percent YoY in constant currency.

In terms of revenue Mode 2 (emerging technologies) and Mode 3 (IP-led growth) together constitute 28.4 percent at the end of FY2019. While Mode 2 grew 28.7 percent yoy, Mode 3 grew 48.4 percent for the FY2019.

C Vijayakumar, President & CEO, HCL Technologies, the company expects Mode 2 and Mode 3 to constitute 35 percent of revenue in the coming years.

This confidence is at the back of increasing spend on digital transformation and IBM IP products to pay off in FY20. Vijayakumar said, "Every industry is re-imaging their digital journey and it is a tailwind that will drive our growth."

"We have launched new products, our own IP, which will strengthen our portfolio," he added.

In addition the spend on digital transformation stands at $6 trillion, 20 percent of which are on digital and growing at 18 percent yoy. According to Vijayakumar, the company's investments in Mode 2 services will help leverage this capability.

Last fiscal the company acquired seven of IBM products for $1.8 billion. HCL Tech will finalise the deal by May or at most by July. the company expects these products to drive Mode 3 growth in FY20.

Of the 14-16 percent revenue guidance, Prateek Aggarwal, CFO, HCL Technologies Ltd, "We expects 7-9 percent growth organically and 7 percent inorganic growth." The inorganic growth will be led by IBM products and other acquisitions the company made last fiscal.

The company's organic growth stood at 6.3-6.5 percent for FY19 and the company's guidance was 4.5-6.5 percent.

The company has announced a dividend of Rs 2 per share, 65th consecutive quarter of dividend payout. Payout ratio for FY’19 stands at healthy 52.6 percent.

C Vijayakumar, President & CEO, HCL Technologies, “HCLites have delivered a truly blockbuster performance with a double-digit constant currency revenue growth of 11.8%, that outperformed the high-end of our guidance. With 28.7% YoY growth in constant currency, our new Mode-2 services delivered their strongest growth.”