HCLTech forecasts revenue growth of 6-8% for FY24

HCLTech has forecast its FY24 revenue growth to be in the range of 6-8% in constant currency, somewhat better than the 4-7% guidance provided by peer Infosys. The EBIT margin guidance for FY24 stood at 18-19%.

The Noida-based IT services major posted a net profit of Rs 3,983 crore for the March quarter, up 10.8% from a year ago, but down 2.8% sequentially, amid a challenging business environment with clients cutting down on discretionary budget.

The revenue for the March quarter was up 17.7% from the year-ago period to Rs 26,606 crore as digital revenues continue to show demand. The digital revenue for the fourth quarter grew nearly 17% YoY in constant currency and contributed 37.5% of HCLTech services revenue.

The company’s dollar revenue for the March quarter grew 10.5% annually in constant currency to $3.2 billion, but declined 1.2% sequentially, indicative of a tough business environment.

“Our pipeline is near an all-time high which reflects our differentiated business mix and strong client demand for our offerings,” C. Vijayakumar, CEO and MD, HCLTech.

Analysts expect HCLTech to grow faster than both Infosys and TCS in FY24. “We estimate HCLTech growth at 7.9% YoY in CC terms for FY24, close to the top end of the guidance of 6-8%. As a result, we increase our revenue forecasts over FY24-26 by up to 2% each year. On EBIT margin, we have lowered our outer year assumptions due to the company’s higher focus on cost take-out deals in which margins are lower,” ICICI Securities said in a post earnings note.

The attrition rate for the March quarter reduced to 19.5% from 21.7% in the December quarter indicating a constrained job market across the sector. The company made a net addition of 3,674 employees during the quarter, taking the total headcount to 225,944.