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View Promises →HCL Technologies Ltd — Q3 FY25
HCL Tech reported a solid Q3 FY25 with constant currency revenue growth of 4.1% YoY and 3.8% QoQ, driven by broad-based demand recovery in technology, financial services, and retail verticals.
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HCL Tech reported a solid Q3 FY25 with constant currency revenue growth of 4.1% YoY and 3.8% QoQ, driven by broad-based demand recovery in technology, financial services, and retail verticals. Services revenue grew 4.9% YoY in CC, while software revenue declined 2.1% YoY due to delayed renewals. EBIT margin improved 93bps QoQ to 19.5%, aided by software margin expansion and forex gains. ACV grew 23% YoY, signaling strong deal momentum despite shorter deal durations. Management guided FY25 revenue growth of 4.5%-5% (including ~50bps from HPE CTG) and maintained EBIT margin guidance of 18%-19%. Q4 is expected to be soft due to a large transformation project completion and planned mega deal rundown. Key risk: potential policy changes in the US could alter client spending priorities.
एचसीएल टेक ने वित्त वर्ष 2025 की तीसरी तिमाही में अच्छा प्रदर्शन किया। कंपनी की आय पिछले साल की तुलना में 4.1% और पिछली तिमाही से 3.8% बढ़ी। यह वृद्धि टेक्नोलॉजी, वित्तीय सेवाओं और रिटेल क्षेत्रों में बढ़ती मांग के कारण हुई। सेवाओं से आय 4.9% बढ़ी, लेकिन सॉफ्टवेयर आय में 2.1% की गिरावट आई क्योंकि कुछ अनुबंधों का नवीनीकरण देर से हुआ। कंपनी का मुनाफा मार्जिन 19.5% हो गया, जो पिछली तिमाही से 0.93% अधिक है। नए अनुबंधों की कुल कीमत 23% बढ़ी, जो मजबूत कारोबारी गति दिखाती है। प्रबंधन ने वित्त वर्ष 2025 में 4.5%-5% आय वृद्धि का अनुमान लगाया है। अगली तिमाही में एक बड़े प्रोजेक्ट के खत्म होने से वृद्धि धीमी रह सकती है। अमेरिका में नीतिगत बदलाव से ग्राहकों के खर्च पर असर पड़ सकता है।
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Policy changes in the US could impact client spending
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ACV Growth (YoY)
23%
+23% YoY
Annual contract value grew 23% year-on-year, indicating strong deal momentum despite shorter deal durations.
Services Revenue Growth (CC YoY)
4.9%
+4.9% YoY
Services revenue grew 4.9% in constant currency, driven by IT & Business Services and Engineering R&D.
Software EBIT Margin
34.5%
All-time high
Software EBIT margin reached an all-time high of 34.5%, benefiting from lower costs and amortization.
Total Headcount
220,755
+2,134 QoQ
Net addition of 2,134 employees, with attrition at 13.2% LTM, reflecting demand pickup.
What Changed vs Last Quarter
NEW
Q4 services organic growth expected -1.3% to +0.6% QoQ
Implies a sequential decline or modest growth due to large project completion and planned mega deal rundown.
NEW
Software business expected low single-digit growth for FY25
Management expects low single-digit growth for the software business on a full-year basis, with some delayed renewals potentially not recovering in Q4.
UPDATED
FY25 revenue growth guidance of 4.5%-5% YoY in CC
Includes approximately 50bps contribution from HPE CTG acquisition. Services revenue growth also expected between 4.5%-5% YoY in CC.
UPDATED
EBIT margin guidance unchanged at 18%-19%
Management maintained EBIT margin guidance for FY25 at 18%-19%.
DROPPED
Wage hike impact of 65-80 bps in Q3 and additional 50-60 bps in Q4
Wage hikes will impact margins by 65-80 basis points in Q3 and a further 50-60 basis points in Q4.
NEW RISK
Policy changes in the US could impact client spending
Management noted that significant changes in the global business landscape, including US policy, could alter client spending priorities.
NEW RISK
Software revenue shortfall may not recover in Q4
Delayed renewals and new closures in software may not materialize in Q4, leading to potential revenue shortfall.
NEW RISK
Automotive sector weakness may persist for 1-2 more quarters
Management indicated that the automotive segment remains challenged, with declines expected for another couple of quarters before recovery.
NEW RISK
California wildfires could impact BFSI clients
An analyst raised concern about potential impact on insurance clients due to California wildfires; management said it's too early to assess.
RISK GONE
Geopolitical and macro uncertainty could impact discretionary spending
Management cited geopolitical factors and global economic conditions as potential headwinds, and noted that discretionary spending can turn quickly.
RISK GONE
Pressure in automotive and aerospace verticals
Automotive, especially in Europe, is under stress with program cancellations; aerospace may also see impact from client-specific issues.
RISK GONE
Furloughs and seasonal weakness in H2
Management assumes similar furloughs as last year, which could limit sequential growth in Q3 and Q4.
RISK GONE
Headcount decline despite revenue growth
Net headcount declined even as revenue grew, raising questions about scalability and future hiring needs.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q4 FY24
Management noted that discretionary spend has not picked up meaningfully, and recovery depends on macro factors like interest rates and inflation.
Mentioned in Q3 FY24, Q4 FY24
Operating margin guidance for FY25 is maintained at 18-19%, consistent with FY24 actuals, with no specific timeline to reach the aspirational 20% level.
Mentioned in Q2 FY24, Q3 FY24
Wage hikes impacted services margins by 65 bps in Q3, and Q4 will see a smaller impact of 20-25 bps.
Mentioned in Q2 FY24, Q2 FY25
Wage hikes will impact margins by 65-80 basis points in Q3 and a further 50-60 basis points in Q4.
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Guidance and risk preview
Includes approximately 50bps contribution from HPE CTG acquisition.
Management noted that significant changes in the global business landscape, including US policy, could alter client spending priorities.
View Risks →