Sustained deal flow, guidance revision signal gradual revival in demand for HCL Tech
HCL Technologies (HCL Tech) beat the analyst expectation in terms of rupee denominated net profit and margin improvement though the dollar revenue growth was marginally below the estimates. The country’s third largest software exporter revised the lower end of the FY25 revenue growth guidance to 4.5% from earlier 3.5%, implying that it was on course to report among the best growth in the top tier.
Revenue grew by 2.4% sequentially to $3,532.9 million, While the growth was better than the 1.7% fall reported by Tata Consultancy Services (TCS), it still lagged the average estimated growth of 2.9% by analysts. Excluding the currency fluctuations, HCLTech’s revenue grew by 3.8% compared with a flat performance by TCS. Considering the trailing 12 month (TTM) revenue, HCLTech has reported higher growth than TCS for the four consecutive quarters. In the latest December quarter, it reported 5.3% TTM growth while TCS recorded 4% growth. Given the HCLTech’s revenue guidance range of 4.5%-5% growth for FY25, it is likely to maintain the lead for the current fiscal year.
In the rupee terms, as well, HCLTech fared better than TCS. While the latter’s revenue dropped sequentially by 0.5% to Rs63,973 crore, HCLTech’s top line rose by 3.6% to Rs29,890 crore. Net profit shot up by 8.4% to Rs4,591 crore compared with the 4% growth for TCS at Rs12,380 crore.
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