HCLTech Q1FY25: Revenue Grows 6.7%, Net Income Zooms 20%; FY25 Guidance At 3-5%

HCLTech on Friday revealed its financial results for the first quarter of fiscal year 2025. The company reported revenue of Rs 28,057 crore, a marginal decline of 1.6 per cent quarter-on-quarter (QoQ) but a 6.7 per cent increase year-on-year (YoY). 

Profitability metrics reflected HCLTech’s strong operational efficiency, with EBIT reaching Rs 4,795 crore, equivalent to 17.1 per cent of revenue, down 4.4 per cent QoQ yet up 7.5 per cent YoY. Net income grew to Rs 4,257 crore, representing 15.2 per cent of revenue, up 6.8 per cent QoQ and a 20.4 per cent YoY increase. 

The firm’s total contract value (TCV) of new deal wins for the quarter amounted to USD 1,960 million (USD 1.96 billion). During the Q1 press conference, HCLTech CEO C Vijayakumar revealed that the company expected better bookings during the quarter but some delays impacted it.

“Our Q1 Revenue and EBIT performance was slightly better than our expectations. We clocked in USD 2 billion TCV of new business bookings. We are confident of decent growth in the coming quarters, positioning us well to deliver our revenue guidance for the year as clients continue to spend on GenAI and other emerging technologies" - C Vijayakumar, CEO & Managing Director, HCLTech.

Return on Invested Capital (ROIC) for the company on a trailing twelve-month (LTM) basis stood at 34.6 per cent, rising by 350 basis points (bps) YoY, while Services ROIC improved by 476 bps YoY to 42.8 per cent.

“We remain committed to improving our capital efficiency and are pleased to report Last Twelve Month (LTM) ROIC for the company is up 350 bps YoY at 34.6 per cent and for Services business is up 476 bps YoY at 42.8 per cent,” said Prateek Aggarwal, Chief Financial Officer, HCLTech.

The company’s digital segment continued to show decent growth, with digital revenues climbing 6 per cent YoY and contributing 37.4 per cent to overall services revenue. 

HCLSoftware also reported positive results, with revenues up 3.5 per cent YoY, maintaining an Annual Recurring Revenue (ARR) above USD 1.01 billion, albeit a slight decrease of 0.3 per cent YoY in constant currency terms.

Guidance 

Looking ahead, HCLTech provided a cautiously optimistic outlook for fiscal year 2025, forecasting revenue growth between 3 per cent to 5 per cent YoY in constant currency. Services revenue is expected to mirror this growth trajectory, with an EBIT margin projected to range between 18 per cent to 19 per cent. 

Dividend

The company also announced a dividend payout of Rs 12 per share, its 86th consecutive quarter of dividends.

Overall Headcount Drops

Despite headwinds and a reduction in total people count (2,19,401 employees) primarily due to divestiture activities, HCLTech added 1,078 freshers during the quarter. Net headcount drop was 8,080.

The trailing twelve-month (LTM) attrition rate decreased to 12.8 per cent, down from 16.3 per cent in the same quarter last year.

Rohit Chintapali

BW Reporters The author is Regional Editor (Technology & South) at BW Businessworld.