India's HCLTech trims full year revenue outlook

BENGALURU (Reuters) – India’s HCLTech has revised its full-year revenue growth outlook, lowering it due to cautious spending by clients and an uncertain demand in the macroeconomic environment. The company now expects organic growth in fiscal 2024 to be around 4-5% year-on-year in constant currency terms, down from the previous expectation of 6-8%. Including the acquisition of German company ASAP, the growth is projected to be between 5-6%.

The July acquisition of automotive engineering services firm ASAP Group for $280 million bolstered HCLTech’s capabilities. The acquisition aims to strengthen the company’s positioning in the automotive sector.

In the second quarter ended on Sept. 30, HCLTech reported a consolidated net profit of 38.32 billion rupees ($460.35 million), a 9.8% increase from the previous year. This exceeded the average expectations of 37.12 billion rupees among LSEG analysts. However, consolidated revenue from operations stood at 266.72 billion rupees, showing an increase of over 8% but falling short of the estimated 268.14 billion rupees.

HCLTech’s results follow the actions of its larger rivals, Infosys and TCS, who also revised their full-year revenue outlooks downward due to weak client spending. Both companies expressed concerns about the uncertain demand outlook and the impact of economic slowdown and higher interest rates on key U.S. and European markets.

Last month, IT major Accenture predicted a sluggish market performance for the coming year and forecasted full-year earnings below Wall Street targets.

HCLTech’s shares closed 1.75% lower on Thursday, prior to the announcement of its financial results.

Overall, the company’s revised outlook reflects current challenges in the IT industry as clients remain cautious about their spending due to uncertain demand and a challenging macroeconomic environment.

($1 = 83.2408 Indian rupees)

(Reporting by Hritam Mukherjee in Bengaluru; Editing by Janane Venkatraman)