HCL Technologies misses Q4 revenue estimates amid weak services vertical

HCL Tech Q4 earnings: HCL Technologies, the country’s third-largest IT services player, reported fourth-quarter revenue figures below market expectations on Friday, reflecting a slowdown in tech spending among clients due to macroeconomic uncertainties.

The company recorded a 7.1 per cent increase in revenue to Rs 28,499 crore for the three months ending March 31, slightly below the average analysts' estimates of Rs 28,607 crore, according to LSEG data.

The technology and services vertical experienced an 8.7 per cent year-on-year decline, while the healthcare and life sciences vertical saw a 1 per cent decrease.

Looking ahead, HCL Tech forecasted a revenue growth of 3 per cent-5 per cent for the financial year 2025, reflecting cautious optimism amidst ongoing challenges in the market.

With clients prioritizing cost-cutting measures, there has been a reluctance to invest in non-essential areas such as cloud services, consulting, and software upgrades. Moreover, an uncertain macroeconomic climate and geopolitical tensions have contributed to subdued demand in India's $254 billion IT industry.

In line with industry trends, peers including Infosys, Tech Mahindra, TCS, LTIMindtree missed analysts' estimates, while Wipro surpassed expectations.

Despite revenue challenges, HCLTech's new deal wins stood at $2.29 billion, representing an increase from the previous quarter and the year-ago period.

However, the company's net profit for the quarter remained flat at Rs 39.86 billion compared to the year-ago period, falling short of analysts' estimates.

Operating margins were reported at 17.6 per cent, down 50 basis points due to higher wage costs, reflecting ongoing cost pressures faced by the company.

HCL Tech shares ended 2.08 per cent lower at Rs 1,472 ahead of its earnings announcement.

(With Reuters inputs)