HCL Technologies Ltd's Q1FY19 consolidated net profit declines 13.6% qoq to Rs2,220cr: Misses Estimates

The company’s consolidated revenue stood at Rs16,425cr, up 2.7% qoq and 18.4% yoy.

August 07, 2019 4:51 IST | India Infoline Research Team

HCL Technologies Ltd Q1FY19

Consolidated Results Q1FY19: (Rs in cr)

Q1FY19 QoQ (%)
Revenue 16,425 2.7
EBIT 2,806 [7.7]
EBIT Margin (%) 17.1 [192]
Net Profit (adjusted) 2,220 [13.6]
***EBIT margin change is bps
HCL Tech reported lower-than-expected numbers for Q1FY20 on EBIT and PAT fronts. The topline for the quarter grew 2.7% qoq to Rs16,425cr, which is higher than the median consensus estimate of Rs16,085cr. Dollar revenue grew by 3.8% qoq to Rs236.36cr. EBIT came in at Rs2,806cr, down 7.7% qoq against the median consensus estimate of Rs2,902cr. EBIT margins contracted by 192bps qoq to 17.1%. Reported PAT declined by 13.6% qoq to Rs2,220cr against the median consensus estimate of Rs2,379cr.
  • Revenue in constant currency (cc) terms grew by 4.2% qoq.
  • Growth was broad-based with all segments reporting growth near company average. IT and Business Services grew by 3.6% qoq cc, ER&D services grew by 5.6% qoq cc, and Products & Platforms grew by 7.0% qoq cc. Infrastructure Services (IMS) is likely to have aided growth in the IT and Business Services segment (based on growth in Mode 1).
  • Mode 1 grew by 4.1% qoq cc, Mode 2 grew by 3.6% qoq cc, and Mode 3 grew by 6.5% qoq cc. Mode 2 services growth is aided by acquisition of Strong-Bridge Envision.
  • Amongst verticals, Manufacturing led growth (+18.4% qoq cc). Technology and services grew by 5% qoq cc, Lifesciences & Healthcare grew by 2.4% qoq cc, and Financial Services grew by 0.5% qoq cc.
  • Telecommunication, Media, Publishing & Entertainment remained weak (-2.7% qoq cc), while Retail & CPG declined by 1.4% qoq cc. Public Services was flat qoq on a higher base (+17.7% qoq cc in Q4FY19).
  • Geographically, America led growth, up 11.7% qoq cc (aided by acquisition), while Europe declined by 8.1% qoq cc (acquisitions in base). ROW declined by 10.6% qoq cc.
  • HCL Tech has maintained cc revenue growth guidance for FY20 at 14-16% and margin guidance at 18.5-19.5%.
  • HCL continued its strong deal win momentum in Q1, signing 12 transformational deals, across its service lines. These deals were led by industries such as Financial Services, Manufacturing, and Retail.

Technical View:

HCL Technologies Ltd ended at Rs. 1,022.30, down by 2.05 points or 0.2% from its previous closing of Rs. 1,024.35 on the BSE.
The scrip opened at Rs. 1,021.70 and touched a high and low of Rs. 1,045.55 and Rs. 1,017 respectively. A total of 20,64,312 (NSE+BSE) shares were traded on the counter. The stock traded above its 100 DMA.

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