HCL Technologies Q1 results: Revenue meets estimates, attrition inches up

HCL Technologies Ltd.’s quarterly revenue rose in line with estimates, aided by deal wins and digital transformation.

The IT company’s revenue increased 3.84% sequentially to Rs 23,464 crore in the quarter ended June, according to its exchange filing. That compares with the Rs 23,410.2-crore consensus estimate of analysts tracked by Bloomberg.

Its revenue in dollar terms rose 1.1% over the preceding three months to $3,025 million.

Key highlights Q1 FY23 (QoQ)

• Net profit declined 8.63% to Rs 3,283 crore, against the Rs 3,325-crore forecast.
• EBIT fell 1.89% to Rs 3,992 crore.
• EBIT margin contracted to 17% from 18%.
• Declared an interim dividend of Rs 10 apiece.
• Attrition inched up from 21.9% to 23.8% on last 12-month basis.

Business environment
HCL Technologies won deals worth $2,054 million in the first quarter compared with $2,260 million in the previous three months. It won seven large service deals and nine product deals from April to June.

Even as concerns of a slowdown persist, the company’s deal pipeline is at an all-time high, Chief Executive Officer C Vijayakumar said. “Customers are continuing with transformation programmes. We may see small projects getting deferred but there’s no structural impact.”

The software company added net 2,089 new employees during the quarter, taking its total headcount to 2,10,966. The company has a target to hire 30,000-35,000 new employees in the current fiscal.

“We are still seeing heightened attrition and it may increase in this quarter also,” Chief Human Resources Officer Apparao VV said, adding that the churn may start stabilising in a quarter to two.

Other highlights (QoQ)

• IT and business services revenue rose 2% to $2,201 million.
• Engineering and R&D services revenue increased 3.7% to $503 million.
• Products & platforms revenue fell 5.1% to $334 million.

Shares of HCL Tech closed 1.85% lower before the results were announced on Tuesday compared with a 0.97% loss in benchmark Nifty 50. Bloomberg