India's HCLTech cuts FY revenue outlook as clients trim spending
By Hritam Mukherjee and Sethuraman N R
BENGALURU (Reuters) -India's No. 3 software-services exporter HCLTech cut its revenue forecast for the current financial year on Thursday, citing softer-than-expected discretionary spending by its clients in the first half of the year.
The company expects organic revenue growth for fiscal 2024 to be between 4% and 5% in constant currency terms, versus its prior view calling for an increase between 6% and 8%.
Indian IT services companies saw several digital transformation projects during the pandemic, but as the macroeconomic situation turned volatile, enterprises are scaling down, delaying updates to those projects by conserving cash.
Larger peers Tata Consultancy Services and Infosys have also flagged weak client spending on non-essential projects. Infosys trimmed the upper end of its annual revenue forecast on Thursday.
"Market is still a little tepid (about) the discretionary spend. At the start of the year, we expected the spend would come back partially at least. But with the current macros, it has not come back," HCLTech CEO C Vijayakumar said in a post-earnings media conference.
HCLTech's consolidated net profit rose 9.8% to 38.32 billion rupees ($460.35 million) in the second quarter ended Sept. 30, marginally beating LSEG analysts' average estimate of 37.12 billion rupees, helped by efforts to rein in costs.
Consolidated revenue from operations rose over 8% to 266.72 billion rupees, but fell short of the analysts' average estimate of 268.14 billion rupees.
New deals won in the quarter, including from clients such as Verizon, Siemens and Australia's ANZ, totalled $3.97 billion, up from $2.38 billion in the year-ago period.
While the Noida-headquartered firm's telecom and technology clients softened spending, the mainstay financial services segment witnessed a near 10% growth.
HCLTech declared a dividend of 12 rupees per share held. The company's shares closed 1.75% lower on Thursday, ahead of the results.
($1 = 83.2408 Indian rupees)
(Reporting by Hritam Mukherjee and Sethuraman N R in Bengaluru; Editing by Janane Venkatraman)
