HCL Tech overtakes Wipro to become third-largest IT services firm in India

C Vijayakumar, president and chief executive officer, HCL Technologies
HCL Technologies (HCLT) on Thursday surpassed Wipro to become the third-largest IT services firm in India in 2018-19, making the first change in the pecking order of the country’s $170-billion IT outsourcing industry in the last seven years.

The Noida-based IT services firm announced its revenues touched $8.63 billion in the last financial year, a rise of 10 per cent over the previous financial year.

 In constant currency terms, the rise was 11.8 per cent. 

Wipro, in comparison, posted IT services revenues of $8.12 billion, up 3.8 per cent over the preceding financial year. 

Last year, Wipro’s full-year revenue totalled $8.06 billion, more than $220 million above HCL Technologies’ $7.84 billion.

For the fourth quarter ended March, HCL Technologies met the street estimates with its revenues and net profit coming in line with analysts' expectations. The IT firm posted a net profit of Rs 2,568 crore, up 15.3 per cent on a year-on-year basis, though it declined 1.7 per cent sequentially.

Revenues in the fourth quarter were Rs 15,990 crore, a rise of 21.3 per cent YoY and 1.9 per cent sequentially. 

The operating margin of the company, however, dropped 70 basis points to 18.9 per cent in the March quarter as compared to 19.6 per cent in the preceding quarter.

For the whole financial year, the net profit of the Shiv Nadar-promoted firm crossed Rs 10,000 crore to reach Rs 10,123 crore, up 15.3 per cent YoY. Similarly, revenues were Rs 60,427 crore, a rise of around 20 per cent on a year-on-year basis. 

Its larger peers such as Tata Consultancy Services (TCS) grew 11.4 per cent in constant currency terms to touch a $20.91-billion top line, while Infosys’ revenues grew 9 per cent to touch $11.8 billion during the last financial year. 

The operating margin of HCL Technologies contracted 20 basis points to 19.5 per cent in FY19.

On the back of a robust deal pipeline, the IT services firm gave a guidance for 14-16 per cent growth in revenues for FY20, making it the firm with the most optimistic outlook for this fiscal. 

In comparison, the TCS management said the firm was hopeful of posting double-digit revenue growth in FY20, while Infosys has guided for a 7.5-9.5 per cent rise in the top line.

Similarly, HCL Technologies sees its margins to be in the range of 18.5-19.5 per cent. 

"HCLT has delivered a truly blockbuster performance with double-digit constant currency revenue growth of 11.8 per cent, which outperformed the high end of our guidance. We once again, for the third time this year, set a new bookings' record," said C Vijayakumar, president and CEO at HCL Tech. 

“We aspire to reach the $10 billion revenue milestone this fiscal year.” Last year, HCL Tech announced that it would buy eight software products or IPs from IBM at $1.8 billion, making it the single-largest acquisition by any Indian IT firm. 

“We have launched a new set of products which is our own IP, and this is going to strengthen our portfolio in terms of products and platforms,” Vijayakumar said.

In the fourth quarter, the IT firm signed 17 new deals and added two more customers in the $100 million customer category.

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