Indian shares of HCL Tech fall more than 6% on margin outlook

BENGALURU, Jan 17 (Reuters) – Shares of Indian firm HCL Technologies Ltd (HCLT.NS) fell 6.2% on Monday and were on course for their worst session since March 2020 as investors were disappointed by the The company’s margin outlook after payroll increases dented December quarter results.

The IT services provider reported a 13% drop in third-quarter net profit on Friday and expects double-digit revenue growth in 2022.

HCL Tech’s overall margin remained stable but fell 190 basis points on a quarterly basis for the IT services segment. The company said margins are expected to recover in fiscal 2022-23.

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“Only the impact of seasonal holidays of 65 basis points is expected to return in the next quarter. The rest will likely take time,” Prateek Aggarwal, chief financial officer of HCL Technologies, said in a conference call.

India’s software services industry has captured more businesses during the pandemic as companies seek to boost their digital presence globally and demand increases for IT services ranging from cloud computing, digital payment infrastructure to cybersecurity.

However, as demand grows, companies have faced intense competition to retain talent, leading to massive wage increases.

“We were concerned about supply-side pressures in the sector and these risks manifested earlier at HCL Tech compared to its peers, which hurt otherwise strong growth,” Ambit Capital said in a statement. a rating.

Last week, Infosys (INFY.NS) raised its revenue forecast and Tata Consultancy Services (TCS.NS) predicted robust demand, saying they expected tech spending to continue. Read more

The Nifty IT index (.NIFTYIT) fell 0.5%, with HCL being the main drag. HCL shares gained 41% in 2021, underperforming a 60% rise in the IT index.

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Reporting by Nallur Sethuraman in Bangalore; edited by Uttaresh.V and Subhranshu Sahu

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