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Aditya Sharma    


Mumbai, India

I am a MBA students and simultaneously reading on capital market to get some knowledge on fundamental research where I more focus on business model, opportunity size of the industry and their related parameters who help me out to find out great businesses for the investment. Nevertheless, I always look forward to learn about grow further into the same.

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Contributor since: 2022

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HCL TECHNO

Comments: 0 | Likes: 0 | Current Price: ₹ 1663.85


HCL Technologies Ltd.

A Q3FY23 Quarterly Earnings Analysis


Q3FY23 Business Highlights

HCLT reported USD 3,244 mn revenue, growth of 5.0% QoQ in CC terms with cross currency tailwind of 30 bps. In YoY CC organic revenue grew by 13%. During 3Q, IT services business has grown at 2.1% QoQ CC (15.3% YoY CC), engineering and R&D services grew at 2.5%, and products & platforms was up 30% as 3Q being the seasonally strong quarter for P&P. Total headcount was up 1.3% QoQ at 222,270, including fresher hiring of 6K in 3Q. EBIT margin was better than expectation at 19.6%, up 160 bps QoQ. It was aided by strong growth in product business, realization improvement, pyramid optimization, operating leverage, and INR depreciation. Net new deals were strong at USD 2.3 bn vs. USD 2 bn average for the past eight quarters. Annualized IT services attrition moderated by ~200 bps QoQ at 21.7%.

  • Constant Currency Revenue up 5.0% QoQ & up 13.1% YoY
  • INR Revenue of ₹ 26,700 Crore, up 8.2% QoQ & up 19.6% YoY

Bookings and Deal Wins

  • Won 17 Large deals - 7 in Services & 10 in Software
  • TCV (New Deal wins) at US$ 2,347 Mn, up 10% YoY
  • ACV up 1.9% YoY

Geographic Wise Growth

Verticals Wise Growth

Concall Highlights

On Demand: Management indicated that there is no cut in the technology spend as the demand looks strong but there is some delay in decision making process especially from Europe and this strong demand was led by all the verticlas. 

IT services business has grown at 2.1% QoQ CC (15.3% YoY CC), engineering and R&D services grew at 2.5%, and products & platforms was up 30% as 3Q being the seasonally strong quarter for P&P.

On grographic front; USA and Europe grew 0.5% and 7.2% QoQ in CC terms.

Deal wins were healthy with TCV bookings at US$2,347 mn, up 10% y-o-y. The company won 17 large deals, of which seven were in Services and 10 in Software verticals. The company also won a major deal of over $500 million for a US-headquartered Fortune 500 financial services company. ACV increased 1.9% yoy, indicating higher tenure of deals signed.

On Margin: Margin of the company improved further and even 3rd quarter in a raw where this landed at 19.6% in Q3. This margis improvement was led by operating leverage, better utilisation, INR depreciation and strong growth from product business. 

Growth and Margin Guidance For FY23

  • Company Revenue expected to be between 13.5% – 14.0% YoY in Constant Currency
  • Services Revenue expected to be between 16.0% - 16.5% YoY in Constant Currency
  • EBIT margin guidance narrowed to 18.0% – 18.5%

Financial Performance during Q3FY23

Disclosure:

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure:

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure:

Source - Company's Result, Presentation and Conference Call. Disc - This is not an recommendation as it is for the knowledge purpose only.

Disclosure legality:

I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.

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