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HCL Tech cuts FY24 revenue growth guidance to 5-6%

HCL Tech cuts FY24 revenue growth guidance to 5-6%
New Delhi, IT company HCL Technologies on Thursday posted a 9.9 per cent increase in consolidated net profit to Rs 3,833 crore in the second quarter ended September 30 on account of new deal wins and enhancing efficiency. The company had posted a net profit of Rs 3,487 crore in the same period a year ago.

HCL Tech reduced the company revenue growth guidance for the full year in the range of 5-6 per cent from 6-8 per cent projected at the end of the June 2023 quarter due to below-expectation performance of the company during the first half of the current fiscal.

The consolidated revenue from operations during the reported quarter increased by 8 per cent to Rs 26,672 crore from Rs 24,686 crore in the September 2022 quarter.

In constant currency terms, HCL Tech revenue was up 3.4 per cent on a year-on-year basis.

"This quarter was definitely a very strong quarter across all dimensions of performance. We recorded an 18.5 per cent operating margin, a 154 basis point improvement at the company level.

"This margin is primarily driving efficiencies in our managed service engagements. We also significantly reduced our dependence on subcontractors. We also controlled some of our discretionary spending," HCL Tech CEO and Managing Director C Vijayakumar said.

Talking about a reduction in growth guidance, Vijayakumar said the growth during the first half has been much lesser than expected, and the company will need to post strong growth on a sequential-quarter basis, both in the third and fourth quarter, to match the growth guidance for the full-year.

"We will be delivering the highest growth in the industry even during this uncertain macro-environment," Vijayakumar said.

He said the company's order bookings during the reported quarter were at an all-time high, with a total contract value of USD 3.96 billion from net new deals during the September 2023 quarter.

"This is 154 per cent growth from the quarter-on-quarter perspective and 67 per cent growth on a year-on-year basis," Vijayakumar said.

HCL Tech Chief Financial Officer Prateek Aggarwal said 3-4 per cent growth in the third quarter, followed by a similar level of growth in the fourth quarter will help the company in delivering the projected growth.

The IT major recorded low attrition of 14.2 per cent during the reported quarter, which was 23.8 per cent a year ago.

HCL Tech's total employee base dropped by 1 per cent to 2,21,139 at the end of the September 2023 quarter as the company reduced hiring, mainly due to a reduction in attrition level.

"Last year, we added about 27,000 freshers. That was one of the highest fresher intakes that we have had in the previous four years. There is also a lot of focus on efficiency improvement within the organisation. Those are the main reasons why headcount drops the way it is. Attrition is almost equal to pre-Covid level," HCL Tech Chief People Officer, Ramachandran Sundararajan said.

He said that the company will be hiring around 10,000 freshers.