HCL Tech gains over 2% post Q1 result; Shiv Nadar steps down as Chairman

Shares of HCL Technologies gained over 2 per cent to Rs 642 on the BSE on Friday after the IT major released its financial results for the first quarter of the fiscal year 2020-21 (Q1FY21). 

At 09:40 am, the stock was trading nearly 0.6 per cent higher at Rs 631 on the BSE. In comparison, the S&P BSE Information Technology index was quoting nearly 1 per cent lower at 17,035.99 levels while the benchmark S&P BSE Sensex was up over 0.5 per cent at 36,679 levels.   

According to TV reports, HCL Technologies on Friday reported a 31.7 per cent year-on-year (YoY) rise in its net profit at Rs 2,925 crore for the quarter under review. The company had logged profit of Rs 2,220 crore in the year-ago period. 

Revenue for the quarter came in at Rs 17,841 crore, up 8.6 per cent against Rs 16,425 crore in the corresponding quarter of the previous fiscal. 

The company's earnings before interest and tax (EBIT) surged 30.4 per cent to Rs 3,660 crore, as against Rs 2,806 crore in the year-ago period. 

The company further said that it expects revenue in constant currency terms to increase by an average of 1.5 per cent to 2.5 per cent on a sequential basis for the next three quarters. It expects operating margin to be between 19.5 per cent and 20.5 per cent for FY21.

Analysts at Dolat Capita say that the company's guidance implies a modest decline in growth for the year. "Profitability guidance implies flat-to-gains on an annual basis. Reintroduction of guidance removes uncertainty, although annual growth may be just inline with street expectations but increased certainty and improving free cash flow (FCF) profile should drive valuations hereon," the brokerage said post the result announcement. 

Meanwhile, the company has also declared an interim dividend of Rs 2 for the financial year 2020-21. "The record date of July 25, 2020 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 7, 2020," HCL Tech said in its press release. 

Further, in a separate filing, the company informed that Roshni Nadar Malhotra, Non-Executive Director has been appointed as the Chairperson of the Board of Directors and the Company with effect from July 17, 2020, in place of Mr Shiv Nadar. 

Nadar, the company said, has expressed his desire to step down from the position of the Chairman. However, he would continue to be the Managing Director of the Company with the designation as the Chief Strategy Officer of the Company, it added.