HCL Technologies shares remained under selling pressure on Wednesday, a day after the Noida-based IT major reported a 100 basis-point sequential drop in its margin amid worsening attrition. HCL Tech's quarterly performance reflects elevated employee costs in the IT space due to high attrition.
The HCL Tech stock fell by as much as Rs 22.9 or 2.5 percent to Rs 905.2 apiece on BSE.
After market hours on Tuesday, HCL Tech reported an EBIT margin — a key metric determining a company's operating efficiency — of 17 percent for the April-June period, as against 18 percent for the previous three months.
Analysts had pegged HCL Tech's margin at 17.6 percent.
HCL Technologies' attrition rate came in at 23.8 percent, higher by 190 basis points compared with the previous quarter.
HCL Tech's net profit saw a decline of 8.6 percent on a quarter-on-quarter basis, according to a regulatory filing. Its revenue, however, increased 3.8 percent sequentially to Rs 23,464 crore. In dollar terms, its revenue grew 1.1 percent to $3,025 million.
Analysts in a CNBC-TV18 poll had estimated the software exporter's growth in dollar revenue at 1.3 percent.
Revenue in constant currency terms — or without fluctuations in currencies —came in at 2.7 percent, in line with the Street estimate of 2.5-3 percent.
HCL Tech CEO and MD C Vijayakumar told CNBC-TV18 that margins have come down across the industry from the peaks reached during the pandemic.
"Q1 (April) has always been the softest quarter from a margin perspective and that's what you're seeing now. It's nothing unusual," he said.
HCL Tech should see its margin improve in the next two quarters, he said.
HCL Technologies CFO Prateek Aggarwal told CNBC-TV18 HCL Tech will see how its margin pans out in the six months ending September before tinkering with its guidance.
HCL Tech maintained guidance in revenue growth at 12-14 percent and in margin at 18-20 percent for the year ending March 2023.
The company expects to be towards the lower end of its margin projection, Aggarwal said.