AI, digital deals lead to HCL Tech's 8% revenue increase in Q2

IT services company HCL Technologies reported an 8.2% increase in revenue to ₹28,862 crore in Q2 FY25 compared to the same period last year. India's third-largest IT major saw its net profit for July-September rise by 11% year-on-year to ₹4,235 crore, surpassing Street expectations.

HCL Tech CEO & Managing Director C Vijayakumar stated that the company's pipeline is robust, with a focus on data & artificial intelligence (AI), digital engineering, SAP migration, and efficiency-led programs.

HCLTech’s Q2 result reflects a strong net profit growth of over 10%, highlighting the company’s ability to manage its finances well despite economic challenges, believes Biswajit Maity, Sr Principal Analyst, Gartner. He believes that HCLTech’s success in its software and service offerings is driven by strong order bookings and big deal wins, contributing to a strong growth momentum.

Notably, in Q2, the Noida-based company secured several digital transformation deals, including an expanded partnership with Xerox in August, emphasising AI-driven engineering services and digital process operations.

Additionally, HCLSoftware, a subsidiary of the Indian IT services firm, acquired a 100% stake in France-based software company Zeenea SAS for 24 million euros (approximately ₹220 crore or $26.2 million) in the same month. This acquisition aims to enhance its data and analytics business offerings to support global clients in their digital transformation journey.

Analysts believe that the key factors in the company’s consistent growth include its global presence, market expertise, adoption of new technologies, customer-focused approach, and strong digital transformation capabilities.

This progress is also supported by its wide partner network and market knowledge. However, some clients have expressed concerns about a lack of innovation and too much reliance on labour instead of automation, as Maity pointed out, to address this, HCLTech is setting up three new centres of excellence dedicated to advancing technology, showing its commitment to innovation and meeting customer expectations.

While HCL Tech's Q2 net profit dipped slightly by 0.5 % sequentially, revenue increased by about 3 % from the previous quarter. The projected Q2FY25 revenue growth was 1.6 % quarter-on-quarter (QoQ) to ₹28,517 crore, with a predicted 5.5 % QoQ decline in profit after tax (PAT) to ₹4,024 crore.

HCL Tech also announced an interim dividend of ₹12 per share, bringing the total interim dividend for the fiscal year to ₹42 per share. Revenue drivers for the quarter included Telecommunications, Media, Publishing, and Entertainment (up 61.2% YoY), manufacturing (up 7.1%), retail and consumer packaged goods (up 6.2%), and technology and services (up 5.6%), while banking, financial services and insurance (BFSI) experienced a 4.5% decline. Despite a decrease in total headcount by 780 employees from Q1 FY25, the company reported a 12.9% attrition rate for the quarter and added 2,932 freshers to its workforce.

On October 10, Tata Consultancy Services (TCS) announced its Q2 FY25 financial results, highlighting strong digital transformation contracts driven by investments in AI, cybersecurity, and cloud services. TCS secured significant contracts in the retail sector with Primark, McDonald’s, and Croma, focusing on digital and business transformation rather than cost efficiency. The company reported an 8% year-on-year revenue increase to ₹64,259 crore, with growth across various sectors. CEO K. Krithivasan noted continued cautious trends but expressed optimism for future quarters. HCL Tech also raised growth guidance slightly after Q2 earnings beat estimates.