HCL Tech Q1 net profit up 2.4 pc at Rs 3,283 cr; revenue rises 17 pc

New Delhi: IT services company HCL Technologies on Tuesday reported a 2.4 per cent year-on-year rise in its consolidated net profit for the three months ended June 2022 at Rs 3,283 crore.

The revenue of the Noida-headquartered firm stood at Rs 23,464 crore, nearly 17 per cent higher than the year-ago period.

The company has retained its FY23 revenue outlook in the 12-14 per cent band, as it continues to see "strong momentum in the market" and is positive about growth trajectory.

HCL Tech CEO and Managing Director C Vijayakumar asserted that the company is focused on profitable growth and sustaining industry-leading performance.

For the fiscal's first quarter ended June 30, 2022, the net profit at Rs 3,283 crore was 2.4 per cent more than that in the year-ago period. Seen sequentially, however, the net profit was 8.6 per cent lower compared to the March quarter.

The company said its booking performance was "strong" for Q1 FY'23, and the total contract value (TCV) of new deal wins stood at USD 2,054 million, registering 23.4 per cent on-year growth.

This included TCV for services at USD 1,950 million, enabled by seven net new large services deal wins, and products TCV at USD 104 million with nine net new large product deals.

There were also significant number of small deals, the company said.

For the June quarter, the services business grew at 2.3 per cent sequentially (19 per cent on-year).

Engineering and R&D services grew at 3.7 per cent sequentially (23 per cent y-o-y) driven by traction in digital engineering and IoT (Internet of Things) works.

IT and business services grew at 2 per cent quarter-on-quarter (18.1 per cent on-year) driven by acceleration in cloud transformation, and application and data modernisation.

The company said 6,023 freshers were added during the quarter, and another 10,400 freshers will be onboarded in the September quarter.

Notably, the attrition level shot up to 23.8 per cent in Q1 FY23, from 11.8 per cent a year ago, and 21.9 per cent in the March 2022 quarter.

The company is seeing increased attrition, and the levels will remain more or less similar in the September quarter, although there are "some green shoots in terms of attrition coming down." "We do hope in a quarter or two it will start stabilising and coming down," the company's Chief Human Resources Officer Apparao V V said.

HCL Technologies Chairperson Roshni Nadar Malhotra said as technology becomes central to lives and businesses, the company is accelerating the digital transformation journeys of its clients.

"We continue to pursue our growth strategy with a sense of purpose and responsibility toward our stakeholders and communities," she said in a statement.

Vijayakumar noted that the company has started FY23 on a "strong note".

"Our services business continues to have robust growth momentum, growing at 2.3 per cent QoQ and 19 per cent YoY in constant currency, driven by our digital engineering and digital application services with cloud adoption being a horizontal theme across all services and verticals," Vijayakumar added.

The new bookings grew 23.4 per cent on year, supported by a "good" mix of large and mid-sized deals and the company's pipeline remains near record high, the top executive said.

"Our operating margin came in at 17 per cent. We have put in place the right measures that will improve our profitability going forward," Vijayakumar pointed out.

HCL Tech's board has declared an interim dividend of Rs 10 per equity share of Rs 2 each for the financial year 2022-23.

The country's largest software exporter TCS had on Friday reported a 5.2 per cent rise in the June quarter net profit to Rs 9,478 crore, restricted by the impact of annual wage hikes and promotions that took operating profit margins to multi-quarter lows.

The Tata Group company had said it does not see any adverse business impact because of worries around recession in its key markets.