HCL Tech Pegs Revenue Growth At 1.5-2.5% For FY21; Wins 11 Deals

HCL Technologies expects a revenue growth of 1.5-2.5 per cent in constant currency terms for the next three quarters of FY21, as it foresees Covid-19-induced uncertainties receding.

The Noida-based firm reported a profit before tax (PBT) of Rs 3,862 crore, up 31.7 per cent year-on-year (YoY), while it remained flat sequentially, the company said in an exchange filing. The net profit for the quarter ended June 2020 (Q1FY21) rose 31.7 per cent year-on-year to Rs 2,925 crore on account of lower outsourcing costs and other expenses. It, however, fell 7.3 per cent on a sequential basis.

"We are seeing a robust demand environment and a strong pipeline which gives us confidence in our growth trajectory going forward," said HCL's Chief Executive Officer C Vijayakumar. "Not all of the dip in revenue is attributed to Covid-19, as some of it was due to offshoring commissioned in the previous year."

HCL’s revenue for the quarter declined four per cent sequentially to Rs 17,841 crore but climbed 8.6 per cent annually. In constant currency terms, revenue was down 7.2 per cent quarter-on-quarter and but rose one per cent on an annual basis. Operating margin fell 40 basis points on a sequential basis to 20.5 per cent in the June quarter. The firm pegged operating margin to be between 19.5 per cent and 20.5 per cent for the current fiscal.

Reinstating revenue growth guidances signal green shoots and a return of confidence for the IT services providers. This comes as Infosys, India's second-largest IT firm, had also forecast constant currency growth in revenue of 0-2 per cent in FY21.

HCL signed 11 transformational deals in Q1 led by verticals such as telecommunication, financial services, manufacturing, life sciences and healthcare, and Vijayakumar said the firm saw bookings in Q4 in the similar range of what the company had in the corresponding quarter last year. The management also said the current environment has created new demand in areas such as e-commerce, digital customer experience and security in its software division.

Like its most of its peers, life sciences was the only vertical that witnessed growth, up 1.9 per cent sequentially. Manufacturing was the most affected as it declined 18.8 per cent while telecommunication, media, publishing & entertainment fell 15.5 per cent.

The IT firm also said work-from-home continued globally at 96 per cent of billed employees, while most of the remaining employees are working from offices or client locations.

Attrition in the April-June period fell 170 basis points to 14.6 per cent when compared to the previous quarter. The headcount stood at 150,287, down 136 employees on a quarter-on-quarter basis.

The company's board has appointed Roshni Nadar Malhotra as the chairperson of the board and company with immediate effect in place of Shiv Nadar who would continue to discharge his duties as managing director and chief strategy officer.