HCL Tech Q3 net profit rises 16% to ₹3,037 crore2 min read . Updated: 17 Jan 2020, 10:40 PM IST
- Growth was led by the IT and business services, and products and platform segments
- HCL Tech also delivered a strong 20.2% Ebit during the October-December 2019 period
NEW DELHI : Noida-based HCL Technologies on Friday beat estimates to report a net profit of ₹3,037 crore in the December quarter, up 14.6% sequentially and 16.3% year-on-year.
The IT major posted revenue growth of 2.1% q-o-q and 16.4% y-o-y in constant currency terms, delivering a strong 20.2% earnings before interest and taxes (Ebit).
“We continue our stellar performance over the years and have now crossed a revenue run rate of $ 10 billion this quarter...I am pleased that our results continue to validate and reinforce our growth, profitability and investment strategies," said C. Vijayakumar, president and chief executive officer (CEO), HCL Technologies, in a statement.
The company said the strong performance was led by double-digit growth across three segments: Products and platforms grew by 72.8%, IT and business services by 10.4%, and engineering and research and development (R&D) services by 12.8% (on y-o-y constant currency basis).
The robust growth in engineering and R&D was driven by large deals and an all-round traction for engineering services in major industries that HCL operates in.
The company said HCL Software, the new business unit for products and platforms, which became operational in Q2, continued its momentum in Q3, onboarding more than 4,600 customers, 1,700 partners and completing over 5,000 sales transactions. HCL Software continues to invest in products and has announced several releases.
HCL also signed 12 deals in Q3 FY20, led by key industry verticals—hi-tech, manufacturing and financial services.
In terms of future guidance, the management raised the revenue guidance from 16.5% to 17% in constant currency for 2019-20. The revenue guidance is based on FY19 (April to March) average exchange rates. The constant currency guidance translates into 15.2-15.7% in dollar terms based on 31 December 2019 rates.
HCL’s business partnerships continued to be strong. For instance, it launched a dedicated Google Cloud business unit to accelerate enterprise cloud adoption. The partnership between HCL and Google Cloud will help organisations advance their digital transformation agenda.
HCL Technologies said its cash generation in Q3 was strong with operating cash flow above $700 million and free cash flow above $650 million. Net cash is now at $1.1 billion, said Prateek Aggarwal, chief financial officer, HCL Technologies Ltd.
The company hired 6,715 freshers and plans to add another 1,885 graduates by the end of 2020. As of 31 December women represented 27% of its global workforce.
Analysts said HCL’s numbers look a lot better when compared to its peers. “Despite a difficult quarter and key industries like BFSI slowing down IT spending considerably, HCL Tech has managed to deliver decent performance. The company’s focus on its products and platforms business is impressive and the swell up in partner ecosystem and the overall customer numbers is impressive," said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research.