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HCL Tech Ltd. reported revenue growth of 3.8% in constant currency terms (our estimate: 3.0%), where services (IT and engineering research and development – 90% of rev) led growth of 5.3% in CC terms, but product and platform business saw 7.8% CC growth decline.
Operating profit margin at 18.0%, above our estimate of 17.6%, led by IT services biz., witnessing margin expansion 101 basis points QoQ primarily led by improved efficiency, better realisation, forex gains, despite completion of wage hikes for large part of workforce. Sub-con cost also reduced by 30 bps sequentially.
HCL Tech’s net new total contract value wins improved to $2.4 billion in Q2, up 16%/6% QoQ/YoY, while annual contract value was higher by 10.3%/23.5% QoQ/YoY. Won one mega deal.
Q2 Beat, guidance upgrade and TCV wins raises our confidence in HCL Tech to deliver financial outperformance over FY23-FY25E.
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