HCL Tech Q2 Results: Net profit up 11% YoY with hike in revenue guidance, dividend declared; 5 key highlights

HCL Tech Q2 Results: HCL Technologies announced its July-September quarter results for fiscal 2024-25 (Q2FY25) on Monday, October 14, reporting a rise of 11 per cent in its consolidated net profit at ₹4,235 crore, compared to ₹3,832 crore in the corresponding period last year. India's third-largest software and information technology (IT) service company's revenue from operations in the second quarter of FY25 increased 8.2 per cent to ₹28,862 crore, compared to ₹26,672 crore reported in the same period last year.

“We delivered a strong quarter with revenue growing 1.6 per cent QoQ in constant currency and EBIT coming in at 18.6 per cent. This growth was well distributed across verticals, geographies, and offerings. HCL Software has delivered a stellar performance of 9.4 per cent YoY this quarter and 6.4 per cent growth in H1 FY25 in constant currency, demonstrating the relevance of our products for the digital economy," said C Vijayakumar CEO, Managing Director, HCL Tech.

Also Read: HCL Tech beats estimates, logs fastest sequential revenue growth in three years
 

Here are 5 key highlights of HCL Tech's Q2 scorecard:

1.P&L Account: Profit, Income, Revenue

HCL Tech on Monday reported a 10.51 per cent increase in consolidated net profit to ₹4,235 crore in the September quarter, as the IT major raised the lower band of its growth guidance on the back of better-than-expected performance in the first half of the year. The Noida-headquartered firm had posted a net profit of ₹3,832 crore in the year-ago period. For Q2FY25, the revenue came in at ₹28,862 crore, 8.21 per cent higher than ₹26, 672 crore in Q2FY24.

Revenue from the banking, financial services and insurance (BFSI) and life sciences verticals fell up to 4.5 per cent on-year, and most other verticals grew between 5.6 per cent and 7.1 per cent. HCL Tech increased the lower band of its revenue growth guidance to 3.5-5 per cent year-on-year (YoY) in constant currency (CC), against a guidance of 3-5 per cent in the first quarter. The EBIT margin guidance was kept constant at 18-19 per cent.

Also Read: HCL Tech Dividend: Board announces interim dividend of ₹12 per equity share

"Our EBIT margins in Q2 rose to 18.6 per cent, up 149 bps sequentially. LTM Return on Invested Capital (ROIC) stands at solid 35.7 per cent at company level and 43.5 per cent at Services, an expansion of 353 bps YoY and 403 bps YoY respectively," said Shiv Walia, Chief Financial Officer (CFO), HCL Tech.

2.Dividend

HCL Tech's board declared an interim dividend of Rs. 12 per equity share of Rs. 2 each of the company for FY25. HCL Tech has declared 91 dividends since September 25, 2000. In the past 12 months, HCL Tech has declared an equity dividend amounting to ₹54.00 per share. At the current share price of ₹1855.9000, HCL Tech dividend yield is 2.91 per cent.

"The Board of Directors has declared an Interim Dividend of Rs. 12 /- per equity share of Rs. 2/- each of the company for the Financial Year 2024-25. The record date of October 22, 2024 fixed for the payment of the aforesaid interim dividend has been confirmed by the Board of Directors," said HCL Tech in a regulatory filing to the stock exchanges. The payment date of the said interim dividend shall be October 30, 2024.

Also Read: HCL Tech Q2 results: Attrition rate drops to 12.9%; 2,932 freshers added
 

3.Headcount, Attrition

HCL Tech saw a decline of 780 employees during the quarter, bringing the headcount tally to 2,18,621. The attrition rate rose to 12.9 per cent compared to 12.8 per cent in the preceding June quarter. HCL Tech said attrition excludes involuntary attrition and digital process operations.

"The "slight" drop came on the back of some of the "efficiency levers" that the company is driving in its business," Ramachandran Sundararajan, Chief People Officer (CPO), HCL Tech told news agency PTI.

"It's also a shift in pyramid that we see. With more requirements for data skills and commercial app skills...you would find the pyramid shift. That's also contributing to the change that we see. That's broadly the reason that we observe in terms of where the headcount is moving. So increasingly, it's going to be more focused on specialization and skills and experiences that will mean more for us," he said.

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"If one looks at the headcount on a year-on-year basis, after normalising for the divestiture (State Street JV) that we reported last quarter, our headcount is still growing," he said. On fresher hiring, Sundararajan said the campus programmes are on. "Our plans are generally made for a full year with a review each quarter. So we do make our moderations each quarter based on the demand movements," he said.

Into FY26, the focus is more going to be on specialisation and not just numbers, he said, adding that the company has added 4,000 freshers year-to-date in this fiscal. Sundararajan further added that employee wage increases will roll out this month.

"So the average, if I look at for all our colleagues in India, will be in the range of about 7 per cent. But as is always the case, increases are linked to performance and top performers will continue to see double digit increases in the range of 12 to 15 per cent. So that's the way we have planned our increases," he said.

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4.Vertical metrics

The telecom, media, publishing and entertainment vertical grew 61.2 per cent YoY, while the manufacturing vertical grew 7.1 per cent YoY in the September quarter. The technology and services vertical grew 5.6 per cent YoY, while healthcare and life sciences vertical grew 2.8 per cent.

The quarter was marked by significant achievements in HCL Tech's Gen AI-related programmes, CEO C Vijayakumar told PTI, adding that the firm saw strong wins with most of its deals incorporating AI capabilities. HCL Tech's strongest showing by geography was in the USA.

"Gen AI presents a particularly exciting opportunity growing at a commendable pace. Our clients have already begun to reap the benefits and value from their AI and Gen AI projects. This trend underscores the significant role technology plays in driving change and enhancing business outcomes. We, however, remain cognizant of the geopolitical factors and global economic conditions which can impact growth," Vijaykumar added.

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5.Deal Wins

HCL Tech's deal wins for the September quarter stood at $2.22 billion. A leading US-based logistics provider selected HCL Tech to transform global IT operations and undertake AI-driven modernization to reduce technical debt. Another leading US-based financial services company selected HCL Tech to accelerate cloud migration and strengthen its fraud and risk management. 

“We remain committed to delivering business growth in a sustainable and responsible way. We have sharpened our focus on upskilling our people in next-generation technologies to continue enabling the art of the possible for our clients. Our global community engagement footprint continues to grow," said Roshni Nadar Malhotra, Chairperson, HCL Tech.