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- 13 Jul 2023
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HCL TECH Q1 RESULTS 2024: NUMBERS BELOW ESTIMATES
HCLTECH - 1638 Change: -25.40 (-1.53 %)
HCL Tech reported its June quarter numbers, and the company has missed estimates on most fronts - CC revenue growth, margins, or profit. Let us look at the quarterly numbers in detail.
About HCL Tech
HCL Tech is a global IT services and consulting company known for its innovative approach and customer-centric solutions. With a strong presence in over 50 countries, HCL Tech offers a wide range of services, including digital transformation, cloud computing, cybersecurity, and artificial intelligence.
Crucial parameters
- PE Ratio: 26.29
- Sector PE: 25.81
- Dividend Yield: 4.33%
- Promoter Holding: 60.81% (March 2023)
Share price movement
After the result announcement on Wednesday, the HCL share price opened negative but was trading flat on Thursday afternoon. In the six-month period, HCL shares have gained nearly 3%.
In the last one year, the share price has given over 21% to investors, higher than the index returns. In the 5-year period, HCL shares have more than doubled investors' investment with returns of nearly 130%.
HCL Latest Quarterly results Q1FY24 details
Revenue: The company reported a revenue of Rs 26,296 crore in Q1FY24. Sequentially (compared to the March quarter), the revenue is down 1.2% but has increased by 12.1% year on year. In constant currency terms, the revenue was down sequentially by 1.3% and 6.3% YoY. The Digital Revenue was up 6% and contributed 37% of HCL Tech Services Revenue.
The best revenue growth was seen for the European market - it reported YoY CC growth of 10.5%. The rest of the World reported a decline in revenue, both YoY and sequentially. Among verticals, Manufacturing was the best-performing vertical, with YoY (CC) growth of 16.5%.
EBIT and Profits: EBIT reported by the company was Rs 4,460 crore, down 17% sequentially and up 11.7% YoY. The net income reported by the company was Rs 3,534 crore, down 11.3% sequentially and up 7.6% year on year.
Margins: The EBIT margins for Q1FY24 were 17%, down from 18.1% in the March quarter. In the year-ago period, the margins were the same at 17%. The Net Income margins have declined from 14.9% in Q4FY23 and 14% in Q1FY23 to 13.4% in Q1FY24.
FY24 Guidance: The company has given a revenue growth guidance between 6% and 8% year on year (CC). Services revenue is expected to grow between 6.5% and 8.5%, and EBIT margins to be between 18% and 19%.
Deal wins: The company won 18 large deals in this quarter, with 7 in Services and 11 in Software. New Deal wins stood at $1565 million, and the pipelines stood at an all-time high - grew 17.7% QoQ and 26.2% YoY. The total headcount stood at 223,438, with a net drop of 2,506 employees in the quarter.
Dividend: The company has declared an interim dividend of Rs 10 per share for FY24. The record date of July 20, 2023, fixed for the payment has been confirmed by the Board of Directors. The payment date of the said interim dividend shall be August 1, 2023.
To sum up
HCL Tech has said that it will skip management-level increments, which form a large part of the wage bill, and defer increments for others to Q3. It should bring in profitability in the near term. Though the numbers are below estimates, the company has maintained its full-year guidance. The revenue can increase in the second quarter with deal wins converting to revenue inflow.