HCL Tech Q2 net profit up 18.5 pc to Rs 3,142 cr, to hire up to 9,000 freshers in H2

IT firm HCL Technologies on Friday posted 18.5 per cent rise in September quarter net profit at Rs 3,142 crore, and said it is looking at hiring up to 9,000 freshers in the second half of this fiscal on the back of strong growth momentum.

The Noida-based company had registered a net profit of Rs 2,651 crore in the year-ago period (as per US GAAP).

Its revenue grew 6.1 per cent to Rs 18,594 crore in the quarter under review from Rs 17,528 crore in the year-ago period.

"We delivered a solid performance in Q2. Our stellar performance is broad-based across verticals, service lines, geographies and Mode 1, 2, 3 offerings. Our new bookings remained very robust, it increased 35 per cent compared to the last quarter, we won 15 transformational deals," HCL Technologies President and CEO C Vijayakumar told reporters in a virtual briefing.

He added that the company's deal pipeline grew 20 per cent quarter-on-quarter, which is "an all-time high".

"We are implementing the salary increments effective October 1, up to E3 levels, and effective January 1, for E4 and above levels. This is only a one quarter shift from the regular increment cycles that we give our employees annually," he said.

The hikes - which were previously deferred amid business uncertainty on account of COVID-19 pandemic - will be similar to previous year. Last year, the company had offered an average 6 per cent raise to its staff in India and 2.5 per cent increase in wages of overseas employees.

The Board of Directors has declared an interim dividend of Rs 4 per equity share for the financial year 2020-21.

Sanjeev Hota, Head of Research at Sharekhan by BNP Paribas, said HCL Technologies reported strong quarterly results, beating its estimates on all fronts and its own margin guidance as well.

However, shares of the company were trading at Rs 828.90, down 3.55 per cent lower than its previous close on BSE.

In the second quarter, HCL Technologies recorded revenue growth at 4.5 per cent quarter-on-quarter in constant currency - higher than its estimate of 1.5-2.5 per cent sequential rise.

HCL Technologies has maintained its revenue growth guidance of an average of 1.5-2.5 per cent increase quarter-on-quarter in constant currency for the third and fourth quarter.

"Last quarter I had said that we believe the worst may be behind us and our Q2 numbers validate that assumption. However, we remain watchful of the second wave of the pandemic. But overall, we are very confident of our performance in the H2," he said.

Vijayakumar noted that the company has a robust deal pipeline and is confident of continuing to deliver 1.5-2.5 per cent average growth in constant currency terms in the next two quarters.

"These are purely organic growth numbers, and does not include the acquisition that we announced, which is still in the process of getting the necessary regulatory approvals. So, the acquisition impact is not baked in the guidance that we are providing," he said.

In September, HCL Technologies had announced the acquisition of Australian IT firm DWS Ltd for USD 115.8 million.

Vijayakumar said the company will increase investments in certain geographies like Germany, France, Australia, Japan and Canada.

"... new technologies, new geographies and enhancing our IP portfolio are some of the areas of investments, which will continue... We're committed to making all the right investments to capture the market," he added.

On a sequential basis, HCL Technologies' net profit was 7.4 per cent higher from Rs 2,925 crore, while topline was higher by 4.2 per cent from Rs 17,841 crore in June 2020 quarter.

At the end of September 2020 quarter, HCL had 153,085 employees, while attrition for IT services (on a last 12 month basis) was at 12.2 per cent.

Talking about the hiring plans, HCL Technologies Chief Human Resources Officer Apparao V said the company onboarded over 1,500 freshers in the September quarter.

"We are significantly enhancing that in the next two quarters. A lot of universities and colleges had not finished their final exams, so the students were not yet qualified to join us though we have rolled out offers... we hired about 3,000 freshers in Q1 and Q2 and in the next two quarters, we expect to hire at least 7,000-9,000 additional freshers," he added. Apparao said the ramp up in hiring is reflective of the pipeline.

On the recently announced restrictions on the H-1B non-immigrant visa programme in the US, Vijayakumar said about two-thirds of its employees are locals.

"The current regulations definitely require the wages to be increased significantly when their visas come for renewal. So, it will have an impact on cost. However, in FY21, we don't see an impact, there are two quarters more to go and there'll be a limited impact this year. But it can have some impact in the next year. We will quantify that as we plan for the next year," he said.

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