HCL Technologies Q1 FY24 results: Stable growth and expanding deal pipeline

HCL Technologies (HCLTech) released its financial results for the first quarter of FY24, which ended on June 30, 2023. Despite a challenging macroeconomic environment worldwide, the Indian technology company has maintained growth momentum with an INR revenue of ₹26,296 crore, marking a 12.1% YoY increase, albeit a 1.2% QoQ decrease.

The quarter’s EBIT was ₹4,460 crore, up by 11.7% YoY but down 7.8% QoQ. Revenue in constant currency saw a 6.3% YoY growth, offset by a 1.3% QoQ dip.

The company experienced a 7.1% increase in services revenue in constant currency terms. HCLSoftware‘s annual recurring revenue (ARR) reached over $1 billion, marking a 4.7% YoY growth in constant currency terms. HCLTech’s revenue guidance for FY24 remains at 6-8% in constant currency with an EBIT margin at 18-19%. The company noted a decreased attrition rate of 16.3% for the quarter, a 7.5% YoY reduction. A dividend of ₹10 per equity share was also announced.

HCLTech reports YoY growth despite global challenges: Q1 FY24 financial results. Photo courtesy of Mohit Agarwal/Wikimedia Commons.

During the quarter, HCLTech secured 18 large deals, seven in services and 11 in software, culminating in a total cumulated value (TCV) of new deal wins of $1.565 billion. The Indian IT company reported a record high deal pipeline with growth rates of 17.7% QoQ and 26.2% YoY.

C Vijayakumar, CEO and Managing Director of HCLTech, mentioned that despite the moderation in revenue and workforce strength, the firm delivered a 6.3% YoY growth in constant currency. Notably, HCLTech saw considerable growth in its main verticals—Financial Services, Manufacturing, and Life Sciences and Healthcare. This growth was propelled by the large deals which helped counterbalance cuts in client discretionary spending within these verticals. Vijayakumar expressed confidence in other verticals picking up soon and the strength of their record-high pipeline maintaining their annual guidance.

In terms of geographical mix, while Europe and the Middle East (EMEA) saw a 10.5% YoY growth in constant currency, Americas’ revenue grew by 7.3% YoY. The growth in industry verticals was spearheaded by Manufacturing with a 16.5% YoY growth, followed closely by Financial Services at 14.4% YoY.

HCLTech’s CFO, Prateek Aggarwal, highlighted a 12.1% YoY revenue growth this quarter, with Services growing at 12.9% YoY. The company noted a healthy addition of clients, with the number of $100 million clients increasing by three and $50 million clients up by six YoY. Aggarwal reported the EBIT margin remaining stable YoY.

HCLTech disclosed its emphasis on emergent technologies like AI and generative AI to cater to the evolving digital transformation needs of its clients. The company has over 70 projects in progress, ranging from proof of concept to implementations.