HCLTech shares jump 5% on ₹4,257 cr Q1 profit

Shares of software services firm HCL Technologies rose as much as 5% in opening trade on Monday after the IT firm reported a 20% increase in its first-quarter net profit at ₹4,257 crore.

The stock opened at ₹1,592.95 against its previous closing price of ₹1,560.40 before hitting an intraday high of ₹1,635.85 on the BSE. The company’s market cap rose to over ₹4.3 lakh crore.

Revenue from operations rose 6.7% year-on-year to ₹28,057 crore in the first quarter of financial year 2024-25. Sequentially, revenue was down 1.6%.

The Noida-headquartered IT firm’s board declared an interim dividend of ₹12 per share.

The software firm’s EBIT margin came in at 17.1% in the June quarter. EBIT at ₹4,795 crore was up 7.5% year-on-year and down 4.4% on a quarterly basis.

For the ongoing fiscal, HCLTech has guided the EBIT margin to be between 18% and 19%.

“If you see the trajectory that HCL has taken on margins, usually Q1 is lowest, Q2 we pick up, Q3 we peak and Q4 it goes down as well,” says C Vijayakumar CEO and managing director of HCLTech.

The company expects to meet its margin guidance of 18-19% in FY25.

In the manufacturing vertical, the company saw some weakness in the automotive segment. “We expect to grow in all geographies and verticals except financial services in Q2,” says Vijayakumar.

“Q2 will be a declining quarter for financial services because of the State Street divestiture revenue going out but after that we will see growth returning to this vertical,” says Vijayakumar.

HCL Tech Investments UK, a wholly-owned subsidiary of HCL Tech, divested its entire 49% stake in the joint venture with State Street International Holdings.

The HCLTech CEO expects discretionary spending in FY25 to be the same as last fiscal.

The company’s revenue growth guidance is in the range of 3%-5% year-on-year in FY25. Services revenue growth is expected to be between 3% and 5%.

HCLTech’s headcount stood at 219,401 with net addition of 8,080 employees in the first quarter. The IT firm added 1,078 freshers. Attrition rate fell to 12.8% in Q1 FY25, down from 16.3% in Q1 of last year.

“Our Q1 Revenue and EBIT performance was slightly better than our expectations. We clocked in $2B TCV of new business Bookings. We are confident of decent growth in the coming quarters, positioning us well to deliver our revenue guidance for the year as clients continue to spend on GenAI and other emerging technologies,” says Vijayakumar.