HCL Tech Ltd. - Q3 FY23 Earning Highlights | Globe Capital Market LTD.
HCL Tech Ltd. – Q3 FY23 Earning Highlights

The company reported a higher-than-expected profit for the December quarter helped by strong deal wins, but lowered its full-year revenue view citing seasonal challenges in the fourth quarter & EBIT margin guidance narrowed to 18.0% – 18.5%.  

Q3 FY23 Earning Overview and Verdict
Rs. 1060
Beat the market estimates

Q3FY23 Earning Key Highlights:

  • The Company reported 19% year-on-year (YoY) growth in consolidated net profit to Rs 4,096 crore. The revenue for the quarter grew nearly 20% on year to Rs 26,700 crore. Sequentially, the revenue rose a sharp 8% and the profit by more than 17%.
  • In constant currency terms, revenue in the December quarter rose 5% sequentially and 13.1% YoY.
  • The operating profit at Rs 5,228 crore was at an all-time high.
  • EBIT Margin at 19.6%, up 165 bps QoQ.
  • Net Margin at 15.3%, up 117 bps QoQ.
  • Operating Cash Flow at 111% & Free Cash Flow at 99.6% of Net Income (LTM).
  • The Company won 17 large deals during the quarter, with new deal wins at $2.35 billion, up 10% YoY.
  • Interim dividend: The Company’s board has approved an interim dividend of ₹10 per equity share for FY23. The record date is set as 20 January, 2023. The payment for the said interim dividend shall be made on 1 February, 2023.
  • The fresher additions were also less at 5,892 compared to 10,339 a quarter ago. Net addition of 2,945 during the quarter, closing headcount: 222,270
  • During the quarter, the attrition rate dipped further to 21.7% on a 12-month trailing basis, from 23.8% in the September quarter.

Management Takeaways:

  • The management has further reduced its constant currency revenue growth guidance for the current financial year to 13.5-14.0% from 13.5-14.5% earlier. The company also lowered its operating margin guidance to 18.0-18.5% from 18-19% earlier.
  • The management is confident to deliver industry leading growth over the medium-term supercharged by its positioning, its strong propositions and its passionate people.
  • The management is committed to bringing together the best of technology and its people to supercharge progress for clients in their digital transformation journeys. And it continues to execute its strategy by aligning to the highest standards of governance and transparency.
  • The Company added 3 clients in the $50 million basket, two in the $20 million basket, and 9 in the $5 million basket during the quarter.
  • The top 5 clients contributed more than 10% to the overall revenues in the third quarter.

Valuation & View

At the CMP of Rs. 1060, the stock is trading at annualised P/E multiple of 21.12 times with the annualised EPS of Rs. 50.17, which is fairly valued.


Globe Capital Market Limited (“GCML”) is a Stock Broker registered with BSE, NSE and MSEI in all the major segments viz. Capital, F & O and CDS segments. GCML is also a Depository Participant and registered with both the Depositories viz. CDSL and NSDL. Further, GCML is a SEBI registered Portfolio Manager. GCML includes subsidiaries, group and associate companies, promoters, directors, employees and affiliates.

Globe Commodities Limited, Globe Derivatives and Securities Limited & Globe Fincap Limited are subsidiaries of GCML. Rolex Finvest Private Limited, A to Z Consultants Private Limited, A to Z Venture Capital Limited, M. Agarwal Stock Brokers Private Limited, A M Share Brokers Private Limited, Shri Adinath Advertising Company Pvt. Ltd., Orient Land base Private Limited, Bolt Synthetic Private Limited, Price ponder Private Limited and Lakshya Impex Private Limited  are associates of GCML. Globe Comex International DMCC is step down subsidiary of GCML.

This report has been prepared by GCML and published in accordance with the provisions of Regulation 19 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014, for use by the recipient as information only and is not for general circulation or public distribution. This report is not to be altered, transmitted, reproduced, copied, redistributed, uploaded, published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from GCML. The projections and the forecasts described in this report are based on estimates and assumptions and are inherently subject to significant uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates on which the projections are forecasts were based may not materialize or may vary significantly from actual results and such variations will likely increase over the period of time. This report should not be construed as an offer to sell or the solicitation of an offer to buy, purchase or subscribe to any securities, and neither this report nor anything contained therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. It does not constitute a personal recommendation or take into account the particular investment objective, financial situation or needs of any individual in particular. The research analysts of GCML have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. The recipients of this report must make their own investment decisions, based on their own investment objectives, financial situation or needs and other factors. The recipients should consider and independently evaluate whether it is suitable for its/ his/ her/their particular circumstances and if necessary, seek professional / financial advice as there is substantial risk of loss. GCML does not take any responsibility thereof.

Any such recipient shall be responsible for conducting his/her/its/their own investigation and analysis of the information contained or referred to in this report and of evaluating the merits and risks involved in securities forming the subject matter of this report. The price and value of the investment referred to in this report and income from them may go up as well as down, and investors may realize profit/loss on their investments. Past performance is not a guide for future performance. Actual results may differ materially from those set forth in the projection.

This report has been prepared by GCML based on the information available in the public domain and other public sources believed to be reliable. Though utmost care has been taken to ensure its accuracy and completeness, no representation or warranty, express or implied is made by GCML that such information is accurate or complete and/or is independently verified. The contents of this report represent the assumptions and projections of GCML and GCML does not guarantee the accuracy or reliability of any projection, assurances or advice made herein. Nothing in this report constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances.

Since GCML or its associates are engaged in various financial activities, they might have financial interest or beneficial ownership in various companies including subject company/companies mentioned in the report. GCML or its associates have not received any compensation for investment banking or merchant banking from the subject company in the past 12 months.  GCML or its associates might have received any compensation including brokerage services and for products or services other than investment banking or merchant banking from the subject company in the past 12 months. It is confirmed that GCML or research analyst or its associates have not managed or co-managed public offering of securities for the subject company in the past 12 months.

Research analyst or GCML or its relatives’/associates’ have no material conflict of interest at the time of publication of this report. Neither research analyst nor GCML are engaged in market making activity for the subject company. It is confirmed that research analysts do not serve as an officer, director or employee of the subject company. It is also confirmed that research analyst have not received any compensation from the subject company in the past 12 months.

No material disciplinary action has been taken on GCML by any regulatory authority impacting Equity Research Analysis activities.

The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. GCML reserves the right to make modifications and alternations to this statement, as may be required, from time to time.

Research analyst or GCML or its relatives’/associates’ do not have actual/beneficial ownership of 1% or more in securities of the subject company, at the end of the month immediately preceding the date of publication of the document.