Indian IT Giant HCLTech Revises Growth Forecast Amidst Software Business Underperformance
Acquisitions Boost Revenue Expectations
HCLTech, India’s third-largest software company by revenue, has revised its full-year revenue growth forecast to 4.5%-5% for fiscal 2025, up from its previous estimate of 3.5%-5%. This upward revision is largely attributed to the company’s recent acquisition of certain IP assets from HP Enterprise.
December Quarter Revenue Falls Short of Expectations
Despite the revised forecast, HCLTech’s December quarter revenue of 298.9 billion rupees ($3.45 billion) fell short of analysts’ average expectation of 300.68 billion rupees. The software vertical, which accounts for 11% of overall revenue, underperformed, according to C Vijayakumar, who expressed optimism about the demand environment in 2025.
Industry-Leading Growth Expected
Shaji Nair, analyst at Mirae Asset Sharekhan, noted that HCLTech’s operating margin beat estimates, indicating that the company is on track to deliver industry-leading growth among tier-1 IT companies for FY25. This is a promising sign for the Indian tech industry, which has been facing growth slowdowns due to inflationary pressures and macroeconomic uncertainties.
New Deal Wins and Net Profit
HCLTech’s new deal wins stood at $2.1 billion in the quarter, compared to $2.22 billion in the previous quarter and $1.93 billion in the quarter a year earlier. The company’s quarterly net profit rose 5.5% to 45.91 billion rupees, slightly above analysts’ expectations.
Industry Outlook
The Indian tech industry is expected to benefit from U.S. President-elect Trump’s pro-business policies, given that the North American country accounts for over 40% of the sector’s overall revenue. Market leader Tata Consultancy Services recently signaled a potential revival in demand, despite missing third-quarter estimates. Wipro and Infosys are set to report their numbers later this week.
HCLTech’s Shares React
HCLTech’s shares closed 0.3% lower ahead of the results, but the company’s revised growth forecast and industry-leading performance are likely to boost investor confidence in the coming days.
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