HCL Tech Q1 net dips 7.6% to Rs2,220 cr; retains FY20 revenue guidance

HCL’s profit for the April-June 2019-20 quarter was also down 13 per cent sequentially, dented by lower operating income.

Revenue for the quarter was down 2.7 per cent at Rs16,425 crore, growing 18.7 per cent year-on-year and 2.7 per cent sequentially, the company said in its BSE filing. HCL maintained full year revenue growth guidance at 14-16 per cent  and also retained EBIT margin guidance at 18.5-19.5 per cent.

Revenue in dollar terms increased 15 per cent YoY and 3.8 per cent quarter-on-quarter to $2.36 billion and the in constant currency it grew 17 per cent YoY and was up 4.2 per cent QoQ.

"We have started FY20 on a very strong note with quarterly revenue growth of 4.2 per cent QoQ and 17 per cent YoY in constant currency. With our current momentum, we aspire to register an industry-leading organic growth in FY20," C Vijayakumar, President and CEO said.

"I am confident that our time-tested operating model will deliver margins within guided range this year," he added.

Geography-wise, HCL said revenue from America increased by 11.7 per cent QoQ in constant currency, but Europe business slowed by 8.1 per cent and Rest of World segment registered a 10.6 per cent fall.

Manufacturing, IT and business services, engineering and R&D services, and products and platforms categories grew by 18.4 per cent, 3.6 per cent, 5.6 per cent and 7 per cent QoQ, respectively, in constant currency.

Earnings before interest and tax fell 7.7 per cent QoQ to Rs 2,806 crore and margin contracted 180bps QoQ to 17.1 per cent in Q1. "Margins this quarter was muted in line with our investment strategy to leverage future growth opportunities," Vijayakumar said.

During the quarter, HCL closed its previously announced $1.8 billion acquisition of select IBM products for security, marketing, commerce, and digital solutions.