HCL Technologies Q1 Results: Profit Falls; Firm Resumes Annual Guidance
HCL Technologies Ltd.'s profit fell in the first full quarter affected by the coronavirus pandemic. Still, it resumed the practice of providing annual guidance.
Net profit of the software services provider declined 7.3% sequentially to Rs 2,925 crore in the three months ended June, according to an exchange filing. That compares with the Rs 2,684-crore consensus estimate of analysts tracked by Bloomberg.
- Its revenue fell 4% to Rs 17,841 crore in the April-June quarter — in line with the Rs 17,882-crore forecast.
- The company's revenue in dollar terms fell 7.4% to $2,351 million — against an estimated $2,351 million.
HCL Technologies has also provided guidance for 2020-21—a practice it shunned in the previous quarter due to Covid-19 uncertainty. It expects a 1.5-2.5% increase in its revenue for the next three quarters in constant currency terms. Operating margins are likely to range between 19.5% and 20.5% for the fiscal ending March 2021.
The virus outbreak stalled all economic activities, barring essential services, as it forced India to impose the world’s biggest lockdown for over two months. That led to a rise in costs for IT firms as most employees worked from home. And as the pandemic gripped the rest of the world, software services exporters also lost billings as they generate most of their business overseas and the bulk of it comes from clients in financial services, manufacturing and communications sectors.
HCL Technologies' bigger rival Tata Consultancy Services Ltd., too, saw its profit and margin decline in the first quarter. While Infosys Ltd.'s profit fell, deal wins and cost cuts cushioned margin. Wipro Ltd. managed to report a rise in bottom line.
HCL Technologies' earnings before interest and tax fell 5.7% over the preceding three months to Rs 3,660 crore in the April-June period. Its EBIT margin contracted 40 basis points to 20.5%.
Meanwhile, the Board of Directors has appointed Roshni Nadar Malhotra, non-executive director as chairperson of board and company with effect from Friday in place of her father, Shiv Nadar.
"...Shiv Nadar, who expressed his desire to step down from position of Chairman. Mr Nadar would continue to be MD of Company with designation as Chief Strategy Officer," the filing said.
Other Key Highlights
- All geographies (Americas, Europe and Rest of the World) saw contraction during quarter on a sequential basis. As compared to the same period last year, Americas grew 1.2%, Rest of World 4% and Europe remained flat.
- All segments saw a decline on a quarter-on-quarter basis.
- Financial services vertical remained flat year-on-year as well as on a sequential basis.
Shares of HCL Technologies are trading as much as 1.47% higher on Friday compared with a 0.63% gain in the benchmark Nifty 50 Index.