FILE PHOTO: Figurines with computers and smartphones are seen in front of HCLTech logo in this illustration taken, February 19, 2024. REUTERS/Dado Ruvic/Illustration/File Photo
BENGALURU (Reuters) -HCLTech, India's third-largest IT services company, on Monday raised the lower end of its fiscal year 2025 revenue growth forecast, citing better-than-expected performance in the first half of the year.
The company said it expects revenue growth of 3.5% to 5% for the year ending March 31, 2025, compared to 3% to 5% previously.
CEO C Vijayakumar said the company remains cognizant of geopolitical factors and global economic conditions, but that business momentum is starting to pick up.
"Incremental demand definitely got better during the quarter across multiple verticals," he said.
The company reported consolidated revenue of 288.62 billion rupees ($3.43 billion) for the second quarter ended Sept. 30, beating analysts' estimates of 285.5 billion rupees, as per LSEG data.
India's $254 billion IT services sector has been struggling with clients cutting down tech spending due to macroeconomic and geopolitical risks, particularly on discretionary projects.
Revenue from the banking, financial services and insurance (BFSI) and life sciences verticals fell up to 4.5% on-year, and most other verticals grew between 5.6% and 7.1%.
While the BFSI revenue declined on-year, it was primarily due to the divestiture of HCLTech's joint venture with U.S.-based State Street. Barring that, growth in the vertical was strong across geographies, Vijayakumar said.
He also said that discretionary spending improved sequentially in the second quarter.
IT companies have signalled that the BFSI vertical is starting to see recovery.
Shaji Nair, a research analyst at BNP Paribas, said he believes the softer quarters are behind after the company beat estimates.
"With softer quarters behind we believe the company would continue to deliver industry leading growth among Tier 1 companies," he said.
HCLTech's strongest showing by geography was in the Americas, in contrast with its larger rival Tata Consultancy Services, which posted lower-than-expected second-quarter profit due to weakness in the North American market, from where IT companies get a large portion of their revenue.
HCLTech's deal wins for the quarter stood at $2.22 billion.
($1 = 84.0260 Indian rupees)
(Reporting by Haripriya Suresh; Editing by Mrigank Dhaniwala and Varun H K)
