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HCL Technologies Q1 profit dips 8% to Rs 2,230 crore; maintains FY20 revenue growth guidance

BusinessToday.In     August 7, 2019

IT major HCL Technologies (HCL Tech) on Wednesday reported 8.26 per cent year-on-year (YoY) decline in consolidated net profit at Rs 2,230 crore for the first quarter ended June 30. The profit was down 12.54 per cent compared to Rs 2,250 crore in the March quarter.

"The Noida-headquartered company had posted consolidated net profit of Rs 2,413 crore in the same quarter last year," HCL Technologies said in a filing to the Bombay Stock Exchange.

Consolidated revenue from operations, however, increased by 8.14 per cent to Rs 16,427 crore in Q1FY20 as compared to Rs 13,878 crore in Q1FY19. HCL Tech's revenue stood at Rs 15,990 crore in the March quarter.

During the quarter under review, operating margin or EBIT (Earnings before interest and tax) rose 2.8 per cent YoY to Rs 2,806 crore, while operating margins dropped 120 basis points (bps) to 15.2 per cent on yearly basis.

"With our current momentum, we aspire to register an industry leading organic growth in FY20. While our margins this quarter were muted in line with our investment strategy to leverage future growth opportunities, I am confident that our time-tested operating model will deliver margins within our guided range this year," said C Vijayakumar, President and CEO, HCL Technologies.

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In US dollar terms, HCL Tech's consolidated profit declined 10.1 per cent YoY to 320 million, while revenue rose 15 per cent YoY to 2,364 million. EBIT declined marginally by 0.1 per cent to USD 404 million.

The IT services provider reported strong growth at 17 per cent YoY in constant currency, led by double digit growth across Segments. IT and business services rose 18.1 per cent, products and platforms 15.2 per cent, engineering and R&D services 13.3 per cent (on YoY constant currency basis).

"With a rapidly changing global ecosystem and ever-evolving technologies, we believe in building transformational partnerships and long-lasting relationships with our customers by delivering valuable services, products and platforms. Given our deep commitment to be a responsible organization, we continue to remain focused on driving diversity, CSR and sustainability as an intrinsic part of the way we conduct business", said Shiv Nadar, Chairman and Chief Strategy Officer, HCL Technologies Ltd.

Going forward, HCL Tech expects revenues to grow between 14-16 per cent in constant currency in FY20. The operating margin is pegged between 18.5-19.5 per cent.

During the quarter under review, HCL closed the previously announced USD 1.8 billion acquisition of select IBM products for security, marketing, commerce, and digital solutions on June 30, 2019. The company also completed the acquisition of Strong-Bridge Envision (SBE) on April 1, 2019, a digital transformation consulting firm with offices in Seattle, Denver, Atlanta and New York City.

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HCL Tech's board has declared an interim dividend of Rs 2 per equity share of Rs 2 each of the company for the financial year 2019-20.

"The Record date of August 17, 2019 fixed for the payment of the aforesaid interim dividend has been confirmed by the board of directors. The payment date of the said interim dividend shall be August 26, 2019," HCL Tech said in the exchange filing.

During April-June period, there was a net addition of 5,935 employees in the organisation, it said.

Ahead of Q1 earnings announcement, shares of HCL Tech closed day's trade at Rs 1,022.30, down 0.20 per cent, on the BSE on Wednesday.

Edited by Chitranjan Kumar

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