HCL Technologies Case Study: Financials, KPIs, And SWOT Analysis
Did you know there is an Indian listed company which is in the list of 2024 World’s Most Ethical Companies?
We are talking about HCL Technologies Limited, an Indian multinational technology company headquartered in Noida, India, and established by Shiv Nadar in 1991. In this blog, we will cover the company’s overview, market data, financials, balance sheet, and SWOT analysis.
HCL Technologies is a pioneer company in IT services, powered by a global and diverse team of 224,700+ employees across the globe, providing services in 60+ countries. This company comes under the HCL Enterprise.
Further, as of April 2024, HCL Tech has 210+ delivery centres and 60+ innovation labs. The company has cumulatively served more than 10,000 clients.
There are three main business units:
1. Products & Platforms (P&P)
2. IT and Business Services (ITBS)
3. Engineering and R&D Services (ER&D)
| Formerly | Hindustan Computers Private Limited |
| Company | Public |
| Founder | Shiv Nadar |
| Headquarters | Noida, Uttar Pradesh, India |
| Area served | Worldwide |
| Parent Company | HCL Group |
Did you know?
As of January 2024, Shiv Nadar, the founder of HCL Tech, is the 9th richest person in Asia.
Business Model
HCL provides a broad array of business lines, products, and services. The company engages in different segments:
Application Services
The company provides the services industrialized delivery model sets and brings exceptional value to its customers. It includes:
- Oracle Services
- Quality Assurance & Testing Services
- SAP Services
- Microsoft Services.
Business Process Services
HCL understands the business priorities and is helping organizations transition from operational excellence.
- Automated Product Support
- Cognitive Automation
- Finance & Accounting
- Supply Chain Management
- Digital and Content
Engineering & R&D Services
HCL partners with a majority of the global top research and development corporations. The services offered in this segment are:
- Mechanical Engineering
- Experience in Design and Engineering (EDGE)
- VLSI Design Services
- Product Lifecycle Management
- Product Testing and Verification
- DevOps
- Systems & Hardware Engineering
- Embedded Engineering
- Digital Engineering
- Software Engineering
IT Infrastructure Management Services
- Cloud-Native Services
- Cyber Security Services & GRC Services
- Service Integration & Management
- Application Operations
- Next-Generation Data Center Services
- Digital Workplace services
- Next Generation Network Services
DRYiCE
HCL Technologies is also focusing on establishing AI-powered products and platforms for the digital world. It is simplifying and transforming enterprise IT and business operations. The company enables enterprises to operate in a faster, and cost-efficient manner while ensuring superior business outcomes.
Key Performance Indicators (As of April 2024)
| Market Cap | ₹ 4,00,890 Cr. |
| Stock P/E | 25.7 |
| ROCE | 28.3 % |
| Current Price | ₹ 1,477 |
| Book Value | ₹ 242 |
| ROE | 23.0 % |
| Dividend Yield | 3.52 % |
Financial Statement Analysis
Let’s analyse the financial statement, key ratios and peer analysis of HCL Tech.
Income Statement
| Particulars (INR Cr) | Mar-23 | Mar-22 | Mar-21 | Mar-20 |
| Operating Revenue | 1,01,456 | 85,651 | 75,379 | 70,676 |
| Operating Expenditure | 78,832 | 65,125 | 55,354 | 53,390 |
| Profit before Tax | 19,488 | 16,951 | 15,853 | 13,980 |
| Net Profit | 14,851 | 13,499 | 11,145 | 11,057 |
Balance Sheet
| Particulars (INR Cr) | Mar-23 | Mar-22 | Mar-21 | Mar-20 |
| Non-Current Liabilities | 5,330 | 7,076 | 7,548 | 5,438 |
| Current Liabilities | 21,431 | 18,775 | 17,383 | 23,730 |
| Non-Current Assets | 38,582 | 39,816 | 41,962 | 42,169 |
| Current Assets | 53,577 | 48,041 | 43,051 | 38,420 |
Cash Flow
| Particulars (INR Cr) | Mar-23 | Mar-22 | Mar-21 | Mar-20 |
| Cash From Operating Activities | 18,009 | 16,900 | 19,618 | 13,359 |
| Cash Flow from Investing Activities | -3,931 | 1,477 | -5,730 | -12,374 |
| Cash from Financing Activities | -15,881 | -14,508 | -11,192 | -3,168 |
Financials Ratios
| Particulars | Mar-23 | Mar-22 | Mar-21 | Mar-20 |
| ROCE (%) | 29.71 | 26.63 | 27.23 | 28.42 |
| ROE (%) | 23.41 | 22.22 | 20.09 | 23.87 |
| ROA (%) | 16.49 | 15.65 | 13.49 | 16.18 |
| EBIT Margin (%) | 18.21 | 18.91 | 20.45 | 19.62 |
| Net Margin (%) | 14.44 | 15.59 | 14.63 | 15.51 |
| Cash Profit Margin (%) | 18.72 | 20.84 | 20.93 | 20.48 |
Peer Comparison (As of March 2023)
| Particulars | HCL Technologies | Tata Consultancy Services | Infosys | Wipro | LTIMindtree |
| Market Cap (As of April 24 in ₹ Cr) | 4,14,675 | 14,04,759 | 6,15,657 | 2,51,434 | 1,45,139 |
| Revenue (₹ Cr) | 1,08,020 | 2,38,818 | 1,53,189 | 90,742 | 35,315 |
| Net Profit (₹ Cr) | 15,696 | 45,033 | 24,407 | 11,350 | 4,598 |
| Net Margin (%) | 14.33 | 18.51 | 15.66 | 12.16 | 12.82 |
| RoE (%) | 23.95 | 47.70 | 31.24 | 15.34 | 26.52 |
SWOT Analysis
Strengths
- HCL Technologies enjoys a high-grade research team to understand the market and create innovative products.
- The company is the third-largest listed Indian technology service provider in terms of revenue.
- The company has a global presence and offers a diverse set of IT services.
Weakness
- The multinational corporation in IT space such as Wipro, Infosys, and Tata Consultancy have direct competition with HCL Tech, and the company has to maintain the brand value for the upcoming stakes in the future.
- HCL is facing issues in retaining customers because the company is unable to assist in providing cross services to the customers.
Opportunities
- The company can focus on eliminating the overutilization of subcontractors, which will improve the cutting out expenses and eventually improving the profitability.
- The company has a great Research & Development department that can take the business to the next level.
- The company develops end-to-end customer segment strategies, further development in this area will improve in revenue generation.
Threats
- HCL Technology has a global presence and generates a healthy part of the revenue outside India. Any kind of depreciation in domestic currency, i.e., INR can significantly affect the revenue of the company.
- The company engages with high-risk investments and intense competition from its peers such as Wipro, Infosys, TCS, and global players such as Accenture, IBM, and many more.
Conclusion
In summation, HCL Technologies, with its robust research & development capabilities, is a leading IT services company with a global presence and a diverse range of products and services.
The company’s recent growth and cost optimization contribute to its market success, which may further help the company to experience momentum in revenue and market growth in the coming years.
Frequently Asked Questions
- Who is the founder of HCL Technologies?
Ans: Shiv Nadar laid the foundation of the HCL Tech in 1991.
- Who is the CEO of HCL?
Ans: As of April 2024, Mr. C Vijay Kumar holds the CEO position in HCL.
- What is the business operation of HCL Technologies?
Ans: HCL Technologies with clients across multiple verticals, offers solutions for Technology and Services, Telecom and Media, Retail and CPG, Public Services, Financial Services, etc.
- Where is the headquarters of HCL?
Ans. HCL has its headquarters in Noida, Uttar Pradesh.
- What is the full form of HCL?
Ans: The full form of HCL is Hindustan Computers Limited.
Disclaimer: The securities, funds, and strategies mentioned in this blog are purely for informational purposes and are not recommendations.
