HCL revenue declines 7.4% QoQ; Roshni Nadar succeeds father Shiv Nadar as Chairman

KEY HIGHLIGHTS

• Roshni Nadar replaces her father Roshni Nadar as Chairperson of HCL Technologies

• Guides revenues growth of 1.5% to 2.5% in constant currency for FY21

• Revenue decline has been attributed to large off shoring of deals signed last year

• HCL sees uptick in e-commerce, digital marketing, digital experience, security

Noida-based HCL Technologies posted $2,356 million dollars in revenues, a sequential decline of 7.4 per cent, for the quarter ending June 30. The company resumed providing annual guidance which it had deferred last quarter. HCL said that it expected the revenue growth to be in the range of 1.5% to 2.5% in constant currency terms for the remaining three quarters of the fiscal and the operating margins to be between 19.5% and 20.5% for FY'21.

The company also said the decline in the revenue was not just due to COVID-19, but also because of  large off shoring of deals signed last year. During the past quarter, the company had signed 11 large transformational deals in verticals such as telecommunication, financial services, manufacturing, life sciences and healthcare in the US and Europe in the range of $30-40 million.

The Products and Platforms segment, which grew 77 per cent year-on-year, had limited impact of COVID-19. In fact it witnessed a demand growth, according to C Vijayakumar, President & CEO, HCL Technologies.  "In areas such as e-commerce, digital marketing, digital experience, security there has been a good uptick in new licence sales," he said.

HCL said business around cost optimisation drives in energy, auto industries and digitisation in BFSI, retail and other sectors, apart from hybrid cloud adoption, are seeing renewed demand.  Vijaykumar further said that vendor consolidation in BFSI sector is also gaining momentum.

The company's EBITA margin for Q1 which stood at 25.6 percent was an increase of 490 basis points on a year on year.  The company's operating cash at $819 million was also a result of improved processes. "We focused right from the very beginning on raising invoices early and following up with customers to collect on time, or even before time, and that has what has delivered cash flow," said Prateek Aggarwal, CFO.

Apparao VV, Chief Human Resources Officer said the head count remained flat and the company on-boarded 1,000 freshers during the quarter. The company said it had intensified training to fulfil internal requirements but was not planning to give any increments for FY21.

Last quarter the company had indicated that there could be a delay in its appraisal cycle, which is effective July. The company also announced the appointment of Roshni Nadar Malhotra as the Non-Executive Chairperson of the company replacing her father Shiv Nadar.

However, Shiv Nadar will continue to be the Managing Director of the company and its Chief Strategy Officer. "HCL as a company prides itself in a very strong succession planning," said Vijay Kumar, and this move by the board was also in that direction.