HCL Tech Q4 takeaways: Deal momentum strong, attrition rate under control

The company’s consolidated net profit fell nearly 26 per cent on a quarter-on-quarter basis, whereas its consolidated revenues grew 1.8 per cent.

“FY21 has been an unprecedented year by all yardsticks. In this pandemic year, HCL was able to support clients not only to run their businesses, but also to digitize and modernize their applications and operations,” said Prateek Aggarwal, chief financial officer at HCL Technologies in a post-earnings statement.

Here are the major takeaways from the Noida-based IT company’s Q4 earnings:
Deal momentum strong
The company said that it won its largest ever deals worth $3.1 billion in the quarter ended March, which was larger than Infosys’ $2.1 billion deal wins. The company added four new clients in the $50 million plus category and five more in the $10 million plus bracket on a sequential basis during the quarter.

Guidance vague, but healthy
HCL Tech said that it expects its revenues to grow in double-digits in 2021-22 as against analysts’ expectation of a specific guidance of 11-13 per cent growth in constant currency terms. “With these solid financials, a passionate employee family and a business model that has consistently proven itself for its resilience and relevance, we step confidently into FY22,” said C Vijaykumar, the president and chief executive officer of the company.

Margins pressure foreseen
HCL Tech said that it expects its consolidated operating margin to trend at 19-21 per cent in the current financial year, which is lower than its full-year operating margin of 21.4 per cent and lower than its last year’s guidance of 19.5-20.5 per cent. The pressure on margin is likely to come from the need to pay hikes in the year to retain talent.

Pay hikes, bonus help retain talent
In a quarter when Wipro and Infosys both reported a jump in attrition rate, HCL Tech registered a fall in attrition rate to 9.9 per cent from 10.2 per cent in the previous quarter, reflecting that its pay hikes and special bonus did help in retaining talent and attracting new staff.