HCL Tech posts net profit of ₹3,154 crore in Q4

Information technology major HCL Tech has reported a net profit of ₹3,154 crore for the quarter ended March 31, up 22.8% from the year earlier. It reported revenue of ₹18,590 crore, up 16.3% year-on-year. Earnings before interest and tax (EBIT) was ₹3,881 crore, with an EBIT margin of 20.9%.

In dollar terms, revenue was flat at $2,543 million, up 11.7% year-on-year. In constant currency terms, it was up 13.5% from the year-ago period. HCL Tech’s shares were trading at 513.30 on the BSE, down 1.21%, at 1: 15 pm.

The company said that said that in response to Covid-19, the company had activated its business continuity plan at the end of January and now has 96% of employees working from home, and another 2.5% working from HCL or client locations.

“I am very thankful to my fellow HCLites, who relentlessly worked with our clients over the last 3 months, to keep our client businesses running at this time of unprecedented crisis. We also transitioned over 3.5 million end-users to a fluid workplace model for our clients, many of whom are critical service providers, including several healthcare providers on the frontlines,” president and CEO C. Vijayakumar said.

For the whole of FY20, the IT major’s net profit rose 9.3% from the year-ago period to ₹11,062 crore, while revenue grew 17% to ₹70,678 crore. The revenue growth was within the guided range of 16.5%-17% in constant currency terms, HCL Tech said.

“FY20 has been a landmark year, where we witnessed our highest growth in recent years and an industry leading performance for the fourth consecutive year. Our focussed Mode 1-2-3 strategy helped deliver an all-round growth across service lines, verticals and geographies and enabled us to deliver at the top end of our revenue guidance and exceed the top-end of our margin guidance for the year,” the CEO said.

Like its other IT peers, HCL Tech did not offer any revenue guidance because of the uncertainties as a result of the pandemic. However, the CEO did offer some hope. “Looking ahead we are confident that our capabilities, our balanced portfolio, strong client relationships and our financial strength will help us navigate this crisis and emerge stronger,” he said.

HCL Tech signed 53 deals during the fiscal year, while its $1.8-billion deal in 2018 to buy select IBM products was closed in Q2 of FY20. The company’s board also recommended a final dividend of ₹2 per share on double the number of shares post a 1:1 bonus issue.

CFO Prateek Aggarwal compared the current conditions to “playing cricket with a tennis ball” during a post-results virtual press conference on Thursday. “FY20 has been a fantastic year, wherein HCL has grown at 16.7% in constant currency, by far the fastest growing IT company. This includes industry leading 10.7% organic growth and 6.0% added via our thoughtful acquisitions. Our investments in HCL Software have started bearing the desired fruit in last two quarters and we are pleased to see the strategy contributing handsomely to the profitability as well as cash generation capacity of the company,” he said in a statement earlier.

At the press conference, the CEO said that he didn’t see more than 10% of the company’s employees coming into office by the end of the current quarter. In the next 12-18 months, he saw 50% of the workforce working in office and the other half from home, on a rotational basis.

Chief HR officer Apparao V.V. said that the company had been quick off the blocks in response to the Covid-19 pandemic. As a result, by the time the lockdown started, “we had 94% people working from home”. He added that the company had started “virtually onboarding” people and it had a helpline for employees to deal with the pandemic. Besides doctors, the employees also had access to life coaches to help lower anxiety levels, he said.

HCL Tech had 150,423 employees as of March 31, 2020; it added 1,250 employees in Q4 and had an annual attrition rate of 16.3%.

“The world is going through a significant shift, and adaptability and innovation are the key to stay relevant. As our lives get increasingly governed by new tools and technologies, it is important to find an equilibrium and leverage the power of these solutions to bring about a positive and sustainable change,” said HCL Tech chairman and chief strategy officer Shiv Nadar.