Anand Rathi's research report on HCL Technologies
The revenue from operations of the company increased by 8.2% year-on-year to ₹ 2,88,620 million on a consolidated basis. In constant currency (CC) terms the revenue grew by 6.2% YoY and 1.6% QOQ. This strong growth is aided by surge in license revenue of software business with while digital revenue grew by 7.8% YoY along with manufacturing, BFSI and recovery seen in ER&D services. On the business segment front, revenue for IT Business services, Engineering and R&D services grew YoY by 6.2% and 4.3% respectively in constant currency terms. On Vertical front, revenue for financial services stood by (4.5%), Manufacturing by 7.1%, Life sciences & Healthcare by (2.8%), Technology and Services by 5.6%, Telecommunication by 61.2%, Retail & CPG by 6.2% and Public services grew by (2.0%) on YoY CC growth basis .On geography front, revenue for America, Europe and except ROW grew YOY by 7.5%, 4.2% and (2.6%) respectively in constant currency terms. On profitability front, the company's EBITDA for the quarter increased by 7.4% year-on-year to ₹ 63,690 million with a margin of 22.0% in Q2 FY25. The company's net profit stood at ₹ 42,370 million, with a net margin of 14.6% . The company’s TCV (New deal wins) stood at US$ 2,218 mn compared to US$ 1960 mn in previous quarter. The voluntary employee attrition rate came to 12.9%, down from 14.2% in Q2 of last year. The management has revised the lower band of revenue guidance to 3.5% to 5.0% (from 3-5% guided earlier) YoY on CC basis and EBIT margin guidance remains same i.e 18.0% to 19.0% for FY25. The Board has declared an interim dividend of Rs 12 for the quarter.
Outlook
Going forward for remaining H2 FY25 management expects guided range 0-2% of revenue growth. In 3QFY25, the management expects furlough to remain similar to last year. The company has multiple growth opportunity with focus on data modernization, GenAI stacks, security privacy, cloud engineering and low code capabilities across geographies and verticals. We maintain HOLD rating on the stock with a revised target price of ₹2020 per share.
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