HCLTech raises guidance on better-than-expected performance

The Noida-headquartered firm had posted a net profit of Rs 3,832 crore in the year-ago period.

HCLTech increased the lower band of its revenue growth guidance to 3.5-5 per cent year-on-year in constant currency, against a guidance of 3-5 per cent in the first quarter.

A performance par expectations gave the firm the confidence to increase its growth guidance, HCLTech CEO and Managing Director C Vijayakumar said during the earnings press conference.

For Q2FY25, the revenue came in at Rs 28,862 crore, 8.21 per cent higher than Rs 26, 672 crore in Q2FY24.

"This revenue growth has come with an improved profitability. 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 HCLTech CFO Shiv Walia.

The quarter was marked by significant achievements in HCLTech's Gen AI-related programmes, Vijayakumar said, adding that the firm saw strong wins with most of its deals incorporating AI capabilities.

"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," he said.

This trend underscores the significant role technology plays in driving change and enhancing business outcomes, he said.

"We, however, remain cognizant of the geopolitical factors and global economic conditions which can impact growth," Vijaykumar added.

HCLTech saw a decline of 780 employees during the quarter, bringing the headcount tally to 218,621.

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, HCLTech, said.

HCLTech's headcount at the end of the first quarter of FY25 stood at 219,401.

"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.

"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.

Responding to a question 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.

The company's board has declared an interim dividend of Rs 12 per equity share of Rs 2 each for 2024-25.

Shares of HCLTech settled at Rs 1,856 apiece on the BSE on Monday, up 0.89 per cent from the previous close.