Even as HCLTech cut its revenue forecast for the current fiscal, the shares of India's third largest software-services exporter’s shares were trading nearly 3% higher in early trade on October 13, a day after second quarter results.

The big deals signed in recent months will start generating revenue from November 1, according to C Vijayakumar, HCLTech MD and CEO. Unlike Infosys, HCLTech is likely to have a better time in the second half of the year.

Also Read: HCL Tech announces third interim dividend of ₹12 per share — check payment date details

It is important to note that growth visibility has been relatively bleak this year for all three software giants, TCS, Infosys and HCLTech. “Planning cycles are getting a little shorter as whatever plans you make may not hold good three months down the line…But I can assure we will have a strong exit because Q3 is going to be a strong quarter, and Q4 will be another strong quarter on top of Q3,” Vijayakumar said.

The market is also excited by how HCLTech has managed to contain costs and widen the profit margin. “There is a sharp reduction in the expense on third party contractors, which is a 70 basis points drop. Apart from that, other discretionary expenses like travel and legal expenses also saw a sharp drop of 50 odd basis points,” Prateek Aggarwal, Chief Financial Officer explained, adding that headcount reduction also led to some savings.

Also Read: HCL Technologies headcount declines by 2,299 in Q2, attrition eases at 14.2%

In fact, HCLTech showed the sharpest rise in net margin in the three months ending September 2023, when compared to TCS and Infosys.

The firm's operating margin for the quarter expanded to 18.4%. Aggarwal expects salary hikes to have a 20-25 basis impact on the margin in the January to March 2024 quarter.

HCLTech shares were trading 1.5% higher at Rs 1242.80 on BSE at 11:31 am.

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First Published:Oct 13, 2023 11:39 AM IST