HCL Tech rises after Q1 PAT jumps 31.7% YoY to Rs 2,925 cr

HCL Technologies rose 1% to Rs 633.70 after the company's consolidated net profit rose 31.7% to Rs 2,925 crore on 8.6% increase in revenue to Rs 17,841 crore in Q1 June 2020 over Q1 June 2019.

On a sequential basis, net profit declined 7.3% and revenue fell 4% in Q1 June 2020 over Q4 March 2020. Consolidated EBITDA fell 3.3% to Rs 4566 crore in Q1 June 2020 over Q4 March 2020.

Operating margin (EBIT) fell 5.7% to Rs 3660 crore in Q1 June 2020 over Q4 March 2020. EBIT margin stood at 20.5% in Q1 June 2020, lower than 20.9% in Q4 March 2020 and higher than 17.1% in Q1 June 2019. The result was announced before market hours today, 17 July 2020.

The company's revenue in constant currency was down 7.2% QoQ & up 1% YoY. HCL said it expects revenue to increase QoQ by an average of 1.5% to 2.5% in constant currency for the next 3 quarters. It expects operating margin between 19.5% and 20.5% for FY21.

Commenting on company's performance, C Vijayakumar, President & CEO, HCL Technologies said, "The adverse conditions during this quarter had an anticipated negative impact on our revenue. I am happy to report that the resilience of our operating model helped us deliver stellar operating margins and cashflows. We had healthy bookings enabled by 11 new transformational deal wins. We also renewed several large deals during the quarter."

Prateek Aggarwal, CFO, HCL Technologies said, "HCL's margin resilience and cash generation prowess was highlighted this quarter, despite the COVID-led impact to the topline. Our proactive efforts ensured that EBIT margins came in at 20.5%, exceeding the last 3 quarters' average and was 340 bps higher YoY. EBITDA margin, the closest surrogate to cash generation, came in at a very healthy 25.6%. We generated Operating Cash Flow (OCF) of $819 mn and Free Cash Flow (FCF) of $757 mn, being 212% and 196% respectively of Net Income; FCF came in more than double the quarterly average last financial year. Consequently, we closed the quarter with Gross Cash of $1.95 bn and Net Cash of $1.33 bn."

HCL's attrition (LTM) rate for Q1 June 2020 was at 14.6%, lower than 16.3% in Q4 March 2020. The company's total employee count was at 150,287.

Meanwhile, the company appointed Roshni Nadar Malhotra, non-executive director as the chairperson of the Board of Directors w.e.f. 17 July 2020, in place of Shiv Nadar who expressed his desire to step down from the position of the Chairman.

The company has declared a dividend of Rs 2 per equity share.

HCL Technologies offers its services and products through three business units - IT and Business Services (ITBS), Engineering and R&D Services (ERS) and Products & Platforms (P&P).

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