HCL Technologies Q4 Review - Traction In Services To Cushion The Pain In Products: Motilal Oswal

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Motilal Oswal Report

HCL Technologies Ltd. delivered in line revenue growth (2.5% QoQ constant currency) in Q4 FY21, led by strong traction in IT Services (up 4.4%), but partially offset by muted engineering research and development (up 0.7%) and a fall in products and platforms (down 4.9%) due to seasonality and client-specific weakness.

Ebit margin (adjusted for one-time bonus impact of 370 basis points) fell 250 bps QoQ to 20.4% on wage hike (60 bps), seasonality in products and platforms (70 bps), higher fresher hiring (60 bps), forex (20 bps), and impairment charges (60 bps).

The management guided at double-digit U.S. dollar revenue growth and 19-21% as the Ebit margin band for FY22.

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