HCLTech's Q1 net profit declines 9.7%
The quarter saw HCL's revenue grow to ₹30,349 crore, up 0.3% QoQ and up 8.2% YoY. The company also revised revenue growth guidance downwards between 3% and 5% YoY in constant currency and reset EBIT margin in the 17-18% range, from 18-19% earlier, after its Q1 operating margins declined due to lower utilisation and higher investments in generative AI and go-to-market initiatives.
HCL's consolidated revenue on LTM basis crossed $14 bn; services CC revenue came down 0.1% QoQ and grew 4.5% YoY; digital revenue grew 15.2% YoY, accounting for 41.6% of services. In Q1, the company saw total deal wins worth $1.8 billion.
V. Vijayakumar, CEO & Managing Director, HCLTech said, 'Our operating margin came at 16.3%, impacted by lower utilisation and additional Gen AI and GTM investments.'
He further said, the company had a healthy revenue growth of 3.7% YoY, supported by good performance in our Services business with 4.5% YoY growth in constant currency. 'Our AI propositions are resonating well with our clients and have been augmented further by our partnership with OpenAI. The pipeline continued to grow as the demand environment was stable during the quarter. Overall, the demand environment has not deteriorated,' Mr. Vijayakumar said, addressing a media conference.
He also observed that AI markets globally were witnessing different trends in consumption, with clients becoming more proactive with a mindset that was more towards adoption.
The Noida-based company said its ongoing margin restructuring programme, to take EBIT margins to the 18-19% range, would impact earnings this year. According to the company, the restructuring would comprise various measures, including optimising underutilised facilities and need-based hiring.
Roshni Nadar Malhotra, chairperson, HCLTech, said AI has become integral to the business growth of global enterprises.
'We also remain intensely focused on the ethical deployment of AI and maximising its positive social impact,' she added.
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