HCL Tech Declares Third Interim Dividend. 5 Takeaways from HCL Tech Q2 Results

Following TCS Q2 results announcement earlier this week, another IT major HCL Technologies post market hours today, declared its numbers.

HCL Tech was expected to show improvement in margins after two bad quarters.

The company's management had said during the June quarter earnings that margins have bottomed out at 17% and they will improve over the next two quarters.

Also, better than expected earnings from India's largest IT company TCS set the stage for other IT majors.

So, how did HCL Tech fare this quarter? Here are five key takeaways from HCL Tech's Q2 results.

• HCL Tech's net profit rose 7% YoY to Rs 34.9 bn. Sequentially, net profit rose by 6.3%.
  
  Revenues came in at Rs 246.9 bn, a sequential rise of 5.2% and a YoY growth of 19.5%.
  
  Both, revenues and profit were above street estimates, which were aided by aided by deal wins and digital spending.
• The key highlight was HCL Tech raising its revenue growth guidance for financial year 2023. The company now sees 13.5-14.5% growth in revenue in constant currency, against the earlier projected 12-14%.
• Ebit margin for the quarter came in at 18% against 17% in the June 2022 quarter and 19% in the year-ago period.
• The TCV deal bookings for the quarter under review rose 6% YoY and 16% sequentially to US$2.38 bn.
  
  In the quarter gone by, HCL Tech bagged 11 large deals, with eight of them in the services vertical.
• The company's board also recommended an interim dividend of Rs 10 per share.
  
  This is in addition to two interim dividends already declared, Rs 18 in April 2022 and Rs 10 in July 2022.

How HCL Tech share price has performed recently

Ahead of its results, shares of HCL Tech spiked 2.7% to touch a high of Rs 963.8 against its previous close of Rs 938.6.

As the session progressed, some gains were erased. Shares of the company ended 1.4% higher at Rs 951.7 on the BSE.

HCL Tech has a 52-week high quote of Rs 1,359 touched on 13 January 2022 and a 52-week low quote of Rs 875.7 touched on 29 August 2022.

In 2022 so far, shares of the company are down 28%.

HCL Tech share price is falling this year and the reasons are not hard to guess.

Concerns such as high attrition, weak margins and the global tech stocks selloff have sent even the best IT stocks in India, down around 30-40%.

For the September 2022 quarter, HCL Tech reported last twelve months (LTM) attrition at 23.8%.

Here's a comparative analysis of HCL Tech with its peers.

Comparative Analysis

Company	TCS	Infosys	Wipro	HCL Tech	Tech Mahindra
ROE (%)	44.1	29.4	20.5	22.2	22.1
ROCE (%)	60.2	40	21.8	26.6	26.5
Latest EPS (Rs)	106	52.9	21.1	50	54.9
TTM PE (x)	28.9	27.4	19.4	19.1	18.6
TTM Price to book (x)	11.4	7.6	3.3	4	3.6
Dividend yield (%)	1.4	2.1	1.5	4.4	4.4
Industry PE (x)	26.1
Industry PB (x)	6.7

Data Source: Equitymaster, Ace Equity

About HCL Tech

HCL Technologies is one of the fastest-growing IT services companies in the world.

The company offers IT and business services, engineering and R&D services and various products and platforms to its diversified client base across 46 countries.

It has laid down a blueprint for the growth of its digital business and divided its services into three modes to help its clients in their digital transformation.

To know more about HCL Technologies, check out HCL Tech's financial factsheet and its latest quarterly results.

You can also compare HCL Technologies with its peers:

HCL Technologies vs TCS

HCL Technologies vs Wipro

HCL Technologies vs Tech Mahindra

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