BENGALURU: IT services firm HCLTech on Monday reported better-than-expected earnings for the second quarter ending September 30, which has given it confidence to raise the lower end of its FY25 revenue growth guidance from 3%-5% to 3.5%-5%.
The company has posted a 10.5% increase in Q2 net profit at Rs 4,235 crore as against Rs 3,832 crore in the same quarter last year. It beat Street estimates and posted 8.2% growth in revenues at Rs 28,862 crore as against Rs 26,672 crore in the year-ago period. Sequentially, its net profit was flat as it posted Rs 4,257 crore profit in the June quarter.
During the Q2 press conference, HCLTech CEO and MD C Vijayakumar said they are seeing good demand in financial services and that it is extending to other verticals. “We are a little cautious about extrapolating this for a longer period.
We are going to take it one quarter at a time,” he said. The CEO pointed out that they could see weakness in the demand environment since November-December 2022. He said the firm’s pipelines continue to grow robustly and that its GenAI offerings like AI Force and AI Foundry are resonating very well with the company’s clients. Its EBIT stood at Rs 5,362 crore (18.6% of revenue), up 8.7% YoY and its contract value was at $2,218 million.
HCLTech expects its EBIT margin to be between 18% and 19% in FY25. The IT major saw its total headcount falling by 780 employees in Q2 and LTM attrition at 12.9%. Its chief people officer Ramachandran Sundararajan said HCLTech is continuing with its campus programme. “We are into FY26 cycle now, and our focus is more on specialisations. We have added 4,000 freshers till now in this fiscal,” he said.
Its employees will get salary increase starting this month. Sundararajan said the hikes are linked to performances and there will be a 7% average wage hike in India, and top performers will get 12-14% hike. In Q2, telecommunications, media, publishing & entertainment vertical grew by 61.2% YoY, followed by manufacturing at 7.1%. It has declared a dividend of Rs 12 per share.
Shiv Walia, CFO, HCLTech, said, “Our EBIT margins in Q2 rose to 18.6%, up 149 bps sequentially. LTM Return on Invested Capital (ROIC) stands at a solid 35.7% at company level and 43.5% at services, an expansion of 353 bps YoY and 403 bps YoY, respectively.”