How did you find the HCL Tech results for the Dec-21 quarter?

Like most of the other IT companies, HCL Tech saw better top line revenues but profits came under the scanner with negative growth. HCL Technologies reported 15.69% growth in sales revenues for Dec-21 quarter at Rs.22,331 crore and even on sequential basis, the revenues were up by 8.11%. IT and business services accounted for 71% of revenues, engineering and R&D accounted for 15.9% while products and platforms made up the balance 13.5%.

Problems were visible in the profit growth at an operating level and the bottom line level. For Dec-21 quarter, earnings before interest tax, depreciation and amortization (EBITDA) was down -5.4% yoy basis while EBIT was down -5.5%. However, the situation was not so bad when looked at on sequential basis. Both the EBITDA and the EBIT were 6.8% to 7% higher on sequential basis.

Now, EBITDA at Rs.698 crore implies EBITDA margin of 23.4% while EBIT at Rs.566 crore implies EBIT margin of 19%. Operating margins may have been flat on a sequential basis but down nearly 393 bps on a yoy basis with the company struggling to match up to the margin levels of the Dec-20 levels. This was largely on account of higher manpower costs as well as sharply higher outsourcing costs.

Profit after tax (PAT) for Dec-21 quarter was down -13.28% yoy at Rs,3,442 crore as the higher operating costs pertaining to manpower and outsourcing charges got effectively transmitted to the bottom line. PAT margins narrowed by 515 bps from 20.56% in the Dec-20 quarter to 15.41% in the Dec-21 quarter. Margin guidance stands at 19-21% range for the financial year FY22.