HCL Tech Q3 net profit up 31%, crosses $10-bn revenue milestone in 2020

Riding the digitisation wave, HCL Technologies posted a strong set of numbers for the December quarter, with net profit up 31.1 per cent year-on-year (yoy) at Rs 3,982 crore as compared with the corresponding quarter a year ago. The net profit rose 26.7 per cent on a sequential basis. The net income was also due to lower tax expenses, primarily due to reversal of tax provisions related to prior years, according to the company.

The Noida headquartered company’s consolidated revenue was up 6.4 per cent to Rs 19,302 crore yoy and 3.8 per cent sequentially. The EBIT margin of the IT services provider expanded 265 basis points on a yoy basis to 22.9 per cent in the October-December period -- a 24 quarter high.

The company’s revenue also crossed the $10-billion milestone in 2020, delivering 3.6 per cent YoY growth in constant currency.

Revenue is expected to grow 2-3 per cent in constant currency for Q4 while Ebit outlook for FY21 is now increased to a range of 21-21.5 per cent, up from 20-21 per cent announced previously.

The company won 13 transformational deals across industry verticals, including life sciences and healthcare, technology and financial services. It has classified $25-million above services deals as transformational deals. This booking was 13 per cent higher than the December quarter of 2019 for the company.

“We continue to see a strong pipeline and are confident of further acceleration of bookings in the coming quarters. Our Mode 2 and Mode 3 businesses did a lot of heavy lifting during the quarter. Mode 2 revenues delivered 25 per cent yoy growth.

The robust performance in Mode 2 is driven by digital and cloud businesses which reflects the relevance in the completeness of our enterprise digital transformation propositions. It has proved its mettle this quarter,” said C Vijayakumar, President & CEO, HCL Technologies.

The products and platforms business grew 9.3 per cent yoy. It won 700 new customer footprints during the quarter. Five out of seven verticals showed growth momentum, led by media and telecom.

The company also declared dividends of Rs 4 per share for the quarter.

HCL Tech sees all-time low attrition level in Q3

HCL Technologies has said that in the December quarter, attrition level was at a historic low for the company at 10.2 per cent. It, however, expects it to inch up a little bit in the coming quarters as the pandemic eases and there is pent up demand in the market for these skills.

As the company added a net headcount of 6,597 during the quarter, the total headcount has moved to 159,682. Though there was difficulty in hiring freshers in Q1 and Q2 because of the pandemic challenges, the company accelerated its freshers hiring in Q3 and added 4,022 employees. The IT firm plans to add another 5,000 freshers in the March quarter.

“We significantly ramped up our training during this period. Our training hours have gone up by 81 per cent in this quarter which has resulted in an increase of our internal fulfilment by 10 per cent. That is also a reason which has helped our growth,” said Varre Appa Rao, Chief Human Resources Officer at the company.