KOLKATA: On thursday, India’s fourth largest multinational information technology service and consulting company, HCL Technologies Limited, reported a 22.8% year-on-year (YoY) surge in consolidated net profit for the March-end quarter of FY19. This happened as its net quarterly income amounted to ₹3,154 Crore, as opposed to ₹2,568 Crore in the same period of the fiscal year 2018-19.
Revenues of the software services provider’s also grew by 16.3% YoY during the quarter to ₹18,590 crore as against ₹15,990 crore reported in the corresponding year-ago quarter. Sales rose up 2.5% on a sequential basis over ₹18,135 crore in the December-end quarter, according to its regulatory filing.
Shares of HCL Tech rose as much as 4.5% to ₹542.4 apiece after the results were announced compared to the 0.38% drop in the benchmark Nifty 50 Index. Consequentially, the company proposed final dividend of ₹2 per share on its equity stocks which doubled post its 1:1 bonus issue. This is the 69th consecutive quarter of dividend pay-out, the company stated in a statement.
In US dollar terms, HCL’s revenue rose 11.7% YoY to $2,543.40 million from $2,277.80 million in the previous fiscal. However, on a sequential basis, its dollar sales were flat. Sales growth in constant currency terms rose 13.5% YoY to $2,584.60 million. In rupee terms, the top line increased 2.5% to ₹18,590 Crore.
The filing posted by HCL also stated that its earnings before interest and tax (EBIT) margin rose up sequentially to 20.9% from 20.2% in third quarter of FY19. It calculates to an expansion of 180 basis points on a YoY against 19.1% in FY19. While the result, up till March, doesn’t show a complete impact of the coronavirus pandemic, the company had earlier indicated that its fourth quarter financials will get affected by the outbreak.
“FY’20 has been a landmark year, where we witnessed our highest growth in recent years and an industry leading performance for the fourth consecutive year. Our focused Mode 1-2-3 strategy helped deliver an all-round growth across service lines, verticals and geographies and enabled us to deliver at the top end of our revenue guidance and exceed the top-end of our margin guidance for the year,” C Vijayakumar, President and Chief Executive Officer, HCL Technologies said.
HCL Technologies stated that it had signed 14 transformational deals in the fourth quarter of FY19. These deals were mainly secured in verticals such as telecom, hi-tech, retail & CPG, manufacturing and financial services. But, it chose to not disclose the deal amount.
Furthermore, HCL Tech attributed the quarter’s strength to its quick response to the virus outbreak. It now has 96% of its employees working from home and another 2.5% of its employees working from HCL or client locations. “We kicked off the pandemic response and business continuity plan within 24 hours of coming to know of the first human-to-human transmission outside China on Jan 26,” Vijaykumar acknowledged. “With meticulous execution and effective governance, we were able to get our employees to work from home well before the lockdowns came in place.”
While HCL Tech, too, has not provided an annual guidance or prediction at this time, Vijaykumar expects the second half of the current FY to be better than the first. Instead of focusing on revenue and profit, the company’s priorities for now lie in continuing working with customers and help them in this time while keeping employees motivated and engaged, he said.
In contrast, HCL Tech’s larger peers such as Infosys Ltd. and Tata Consultancy Services Ltd. reported a downturn in the bottom line from the fourth quarter of FY19. This happened as businesses had shut down across the globe owing to the COVID-19 pandemic. While Infosys temporarily suspended its practice of providing growth guidance, TCS said predicted that its revenue to shrink in the current financial year.
On the other side, Shiv Nadar, Chairman and Chief Strategy Officer, HCL Technologies, added, “The world is going through a significant shift, and adaptability and innovation are the key to stay relevant. As our lives get increasingly governed by new tools and technologies, it is important to find an equilibrium and leverage the power of these solutions to bring about a positive and sustainable change.”
HCL had hired 1,250 employees in the fourth quarter of FY19, bringing its overall full-time employee headcount to 1,50,423, the company added.