HCL Tech Reports Strong Q2 Growth Amid AI Advancements

HCL Technologies reported its results for the July-September quarter of FY 2024-25, showing an 11% increase in consolidated net profit, which reached ₹4,235 crore, up from ₹3,832 crore in the same period last year. The company’s revenue from operations also increased by 8.2% to ₹28,862 crore, compared to ₹26,672 crore in the previous year.

CEO and Managing Director of HCL Technologies, C Vijayakumar noted that the company had a solid quarter with a 1.6% growth in revenue compared to the last quarter in constant currency terms, and an EBIT margin of 18.6%. Growth was seen across different business sectors and regions. HCL Software performed particularly well, with a 9.4% year-over-year increase this quarter and a 6.4% growth in the first half of FY25, reflecting the strong demand for its digital products.

HCL Technologies Q2 results reported a 10.51% rise in consolidated net profit, reaching ₹4,235 crore in the September quarter, compared to ₹3,832 crore in the same period last year. The company’s revenue for Q2FY25 stood at ₹28,862 crore, an 8.21% increase from ₹26,672 crore in Q2FY24.

While revenue from the banking, financial services, and insurance (BFSI) sector, along with life sciences, dropped by up to 4.5% year-on-year, most other sectors saw growth between 5.6% and 7.1%. Due to a better-than-expected first half, HCL Tech raised its revenue growth forecast for the year to 3.5-5% in constant currency, up from the previous estimate of 3-5%. The EBIT margin guidance remained steady at 18-19%.

HCL Tech’s Chief Financial Officer, Shiv Walia, highlighted that the company’s EBIT margins for Q2 increased to 18.6%, up 149 basis points from the previous quarter. The last 12 months (LTM) return on invested capital (ROIC) is strong at 35.7% for the overall company and 43.5% for its services division, showing a year-on-year growth of 353 and 403 basis points, respectively.

Additionally, HCL Tech’s board has announced an interim dividend of ₹12 per equity share with a face value of ₹2 for FY25. Since September 2000, the company has declared 91 dividends. Over the past 12 months, HCL Tech has paid a total dividend of ₹54 per share. With a current share price of ₹1,855.90, this brings the dividend yield to 2.91%.

HCL Tech’s Chief People Officer, Ramachandran Sundararajan, noted that despite the recent decrease in headcount, the company’s workforce is still growing year-over-year when adjusted for the divestiture of its State Street joint venture last quarter. Regarding fresher hiring, he mentioned that the company’s campus recruitment programs are ongoing and are reviewed quarterly based on demand. So far, HCL Tech has hired 4,000 freshers this fiscal year.

Looking ahead to FY26, the company will prioritise hiring specialised talent over simply increasing headcount. Sundararajan also shared that wage increases for employees will begin this month, with an average increase of around 7% for employees in India. Top performers will see higher raises of 12-15%, as salary hikes are tied to individual performance.

In the September quarter, HCL Tech experienced strong growth across various verticals. The telecom, media, publishing, and entertainment sectors saw a remarkable 61.2% increase year-over-year, while the manufacturing sector grew by 7.1%. The technology and services vertical had a 5.6% increase, and the healthcare and life sciences sector grew by 2.8%.

For the September quarter, HCL Tech secured deal wins totalling $2.22 billion. A major US logistics provider chose HCL Tech to transform its global IT operations and modernise its systems with AI to reduce technical debt. A prominent US financial services company also selected HCL Tech to speed up its cloud migration and enhance its fraud and risk management processes.

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