HCL Tech likely to grow 1.5-2.5%; Q1 net profit up 31.7% at Rs 2,925 cr

Joining its other large industry peers, HCL Technologies has said it is seeing a clear uptick in demand from the ongoing quarter, as the Noida-headquartered IT services firm guided for a 1.5- 2.5 per cent growth in revenue for the remaining quarters of FY21, in constant currency term.

In the quarter ended Q1FY21, the company on Friday reported a profit before tax (PBT) of Rs 3,862 crore, up 31.7 per cent year on year (YoY), while it remained flat on a sequential basis. The net profit for the quarter rose 31.7 per cent YoY 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 C Vijayakumar, CEO of HCL Technologies. “Not all of the dip in revenue is attributed to Covid-19, as some of it was because of offshoring commissioned in the previous year.”

HCL’s number and management commentary reaffirms the green shoots and return of confidence among IT services firms.  

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

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