#SALES #GROWTH

The sales in FY24 stood at ₹1,09,913 cr, a growth of 8%. In cc terms, revenue increased by 5%. Majority of the growth was driven by Financials, Manufacturing and others, while Technology was impacted during the year due to sluggish macro. Region-wise, Europe led the growth followed by Americas, while ROW declined by 7%. The TCV (new) in FY24 was $9,751 million, higher by 10%. In 9M FY25, revenue stood at ₹86,809 cr, up by ~7% YoY with growth led by TMPE, Retail, Manufacturing & Tech, respectively. In cc terms, revenue grew by ~5% YoY. Discretionary spend has been improving across verticals. Region-wise, growth has been broad based with slight headwinds in ROW. New TCV de-grew by 3% YoY to ~$6.3 billion with a total of 50 large deals won. De-growth is due to a large base owing to the mega deal.

#EBITDA #GROWTH

EBITDA for FY24 stood at ₹24,198 cr, increasing by 6.9%. Employee costs increased by 13% majorly due to higher wages & employee additions while other expenses were up by 4%. However, outsourcing cost declined by 2%. EBITDA in 9M FY25 stood at ₹19,022 cr, an increase of 5% YoY. Employee costs rose by 7% YoY, subcontracting were higher by 3%. Other expenses were higher by 10% YoY. However, profits grew modestly on account of healthy revenue growth.

#PAT #GROWTH

The PAT for the company stood at ₹15,710 cr in FY24, an increase of 6%. The finance cost for FY24 increased by 57% majorly due to rise in lease liabilities while depreciation costs were up by 1%. Other income during FY24 was higher by 10% to ₹1,495 cr. The PAT in 9M FY25 stood at ₹13,090 cr an increase of 12% YoY, due to one-time impact of other income coupled with higher operating profits. The finance costs for the company increased by 28% YoY while depreciation was lower by 1%. Other income stood at ₹2,036 cr as compared to ₹1,079 cr in 9M FY24. The rise was due to gain on divestment of its stake in Statestreet HCL Holding UK Ltd (a joint venture with State Street) done during Q1 FY25. The consideration received for de-consolidation was ₹1,439 cr and net gain from the same was ₹581 cr.

#EBITDA #MARGIN

The EBITDA margin for the company stood at 22.02% in FY24. Seasonality in the Software vertical along with higher marketing related costs had impact on the margins. Higher wages on account of hikes also led to margin contraction. The EBITDA margin stood at 21.9% in 9M FY25, down by 30 bps YoY. Margins for the ITBS vertical was flat YoY. Margins for the ERD services declined YoY which was offset by increase in the Software margins.

#PAT #MARGIN

The PAT margin for the company in FY24 was 14.3%. The margins were lower due to additional costs incurred. However, higher revenue & other income helped offset some of the headwinds. The PAT margin stood at 15.1% for the company during 9M FY25. It expanded by 70 bps YoY, majorly due to higher profits owing to higher other income on account of the exceptional gain. Adjusting for the same, margins would’ve been higher by 20 bps YoY at 14.6%.

#ROCE

ROCE in FY24 stood at 31.13%. PBIT during the year stood at ₹21,520 cr while the capital employed increased to ₹76,020 cr.

#ROE

The metric during FY24 increased marginally to 23.69%. Net profit was ₹15,710 cr, while net worth increased to ₹68,263 cr, majorly due to higher share of retained earnings.

#COMPANY POTENTIAL

• Indian technologies services industry is forecasted to grow 10%-12% to reach $300-$350B revenues and share of digital in Indian technology services revenue is likely to be 55%-60% by 2025 with an annual growth of 25%-30%. (source: NASSCOM) • The Indian IT service industry was $254 billion in FY24 and would grow to reach $350 billion by FY26. • The average tech spending of global enterprises stood at 3% of their revenue which is expected to move to 5% of revenue by 2030. By FY26, ~51% of IT spending is expected to shift from traditional solutions to public cloud as compared to 41% in FY23. • India is the topmost off-shoring destination for IT companies across the world. Having proven its capabilities in delivering both onshore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. The country's cost competitiveness in providing IT services, which is approximately 3-4 times more cost-effective than the US, continues to be its unique selling proposition in the global sourcing market. • Cloud technology is a priority for majority of the organizations, while cyber-security concerns are at the top of mind of CEOs. AI, Automation, data analytics, IoT and robotics will be the key drivers of the future tech stack. • AI Market globally stood at $184 bn in 2024, according to Statista and is poised to grow to $827 bn by 2030, driven by increased push for automation and digital capabilities. • Companies are actively exploring opportunities for digitization, leading to increased demand for consulting services. Digital technologies and next-generation technologies such as 5G, AI/ Intelligent Enterprise, robotics and blockchain, are anticipated to grow exponentially in the near future.

#Future #Plan

The industry is in the third wave of AI evolution. The first was driven by machine learning, the second by deep learning and the third by foundation models that will enable companies to further fine-tune the necessities of specialized domains and tasks. • Blockchain global market stood at $20 billion in 2024 and is expected to grow to $250 billion by 2029. (Source: MarketsandMarkets) • The overall emerging markets, especially Generative AI would reach $1.3 trillion by 2032 from $67 bn in 2023. (Source: Bloomberg) • Digital engineering spends at enterprise level stood at $1,032 bn in 2024 and is expected to reach $1,654 bn by 2027, according to Zinnov. This spend is largely driven by investments focused on building digital infrastructure and development/re-engineering of products and services. Services-led verticals such as BFSI, Retail, Healthcare are increasing their consumption of technology spend to enable new products and services. • According to a report by GrandView Research, in 2023, the worldwide digital transformation market was assessed to be $880 bn, and it is projected to experience a strong growth from 2024 to 2030, driven by growing adoption of cutting-edge technologies such as cyber security, Artificial Intelligence (AI), big data analytics, Business Intelligence (BI), and cloud.

#COMPANY #OUTLOOK

• The company remains confident on achieving healthy growth on account of a strong deal pipeline that is well diversified across regions and verticals coupled with an improved spending environment. • The company anticipates demand to uptick in the coming quarters with clients willing to upgrade, innovate and continue with their tech spend. Furthermore, growth in smaller deals gives confidence of increasing discretionary spending. • For FY25, the company’s revenue growth guidance was revised at 4.5%-5% YoY in cc terms, upgrading from 3.5%-5%, including the revenue from the acquisition of assets from HP Enterprises that completed in December. Further, their guidance for EBIT margins continues to be in the range of 18%-19%. Services revenue is now expected to grow in the range of 4.5%-5% YoY in cc terms for FY25. The previous guidance was 3.5%-5%. Excluding the inorganic contribution, the mid-point of the revenue guidance for FY25 stays the same at 4.25% in cc terms. • They anticipate revenue growth run rate of Service segment during Q4 FY25 to be in the range of negative 1.3%-1% in cc terms. In Q4 FY25, the company has accounted for some planned contractual reductions in the telecom mega deal, absence of the successful delivery of projects that happened in Q3 FY25, and certain delays in deal conversion. • Certain integration costs are anticipated to continue in the next quarter as well with a similar impact on margins of 20 bps. Their aspirational EBIT margin would be in the range of ~19%-20%, going ahead. • Fresher hiring is expected to increase in FY26 to cater to the demand. Attrition in FY25 would stay in ranges of 13%-13.5%. • Retail and Telecom verticals would be soft in the next couple of quarters due to the completion of the deal execution. • Manufacturing, excluding auto has been performing well but the challenging environment in auto is expected to continue for a few quarters.

HCL Technologies 1300-1430
Expected level 1700
Support 1200

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Persistent Systems company details report

Incorporated in 1990, Persistent Systems Limited is amongst the world’s leading providers of product engineering services, platformbased solutions and IP (intellectual property) based software products for global customers. It derives a significant portion of revenue from export of software services and products. It is engaged in providing product and services such as Product & Platform Engineering, CX (customer experience) & Design-Led Transformation, Data & Artificial Intelligence, Cloud-enabled Enterprise Modernization. On 4th May 2022, the company completed its acquisition of MediaAgility Inc., USA and its subsidiaries in the UK, Mexico, and Singapore. MediaAgility is a global cloud transformation services provider with deep expertise in building scalable, cloud-based solutions as a Google Cloud Premier Partner. The total purchase consideration payable for the acquisition of MediaAgility is $71.7 million. MediaAgility had a consolidated revenue of $25.5 million as on LTM December 2021. On 1st March 2022, they acquired businesses from Data Glove IT Solutions Private Ltd, India, Data Glove Inc., USA and its affiliate entities based out of Australia, UK, Singapore and Costa Rica (together referred to as “Data Glove Group”) for $90.5 million. Data Glove Group specializes in providing services across the entire Microsoft Product Suite including Azure based digital transformation, data modernization, cloud advisory services, business application innovation, workspace modernization and intelligent automation. They had total annual revenue for CY21 of $48.9 million and over 700 employees worldwide. In Q4 FY24, the company launched ‘SASVA’, a manageable and secure AI platform that solves complex and specialized use cases in the enterprise setting. It revolutionizes software engineering, with an AI-powered platform leveraging Large Language Models and Machine Learning. It drives enhanced efficiency and agility for organizations across industries by automating and optimizing software engineering lifecycle. During Q2 FY25, they acquired 100% stake of Arrka, a Pune based company renowned for its decade-long privacy expertise, its pioneering Data Privacy Management platform and growing expertise in AI governance. Arrka’s data privacy management platform enables organizations to manage their data privacy risks and comply with multi-jurisdictional legal & regulatory requirements in an integrated manner. The consideration stood at ~₹14 crore and FY24 revenue of the company was ~₹3 crore.

Revenue Segment wise

#SALES #GROWTH 5 Year CAGR 23.9%

Revenue during FY24 stood at ₹9,822 cr, up by 17.6%. The TCV grew by 13% to $1,829 mn in FY24, out of which new deals increased by 19% to $1,130 mn. Despite a weaker demand environment coupled with higher furloughs, the growth was robust due to uptick in existing as well as new client accounts, deal ramp ups along with a healthy deal pipeline, increased efficiency and higher employee utilisation. The growth was broad-based across verticals & geographies. Healthcare is leading the growth followed by BFSI & Technology. Revenue in 9M FY25 was ₹8,697 cr, up by 20%. TCV in 9M stood at $1,586 mn, higher by 15% YoY. Out of this, new TCV was $1,034 mn, up by 25% YoY. During Q3 FY25, they won their highest ever deal of $150 mn with tenure of 7 years from a US-based financial service company. The growth was broad based across verticals & regions led by Healthcare, North America & RoW. Client growth was robust across buckets.

#EBITDA #GROWTH 5 Year CAGR 24.7%

EBITDA during FY24 was ₹1,676 cr, up by 10% YoY. Employee costs were higher by ~20% as the company continued to invest in freshers. The sub-contracting costs were up by 10%, due to the initial ramp up of certain large deals, which led to the onsite effort rise. Despite these, profitability was higher as revenue growth was strong along with increased utilisation and efficiency. EBITDA stood at ₹1,474 cr in 9M FY25, up by 21% YoY. Employee costs were higher by 14% YoY while cost of professionals were higher by 63% due to uptick in onsite resources owing to ramp up of a healthcare deal. Other expenses were higher by 11% YoY.

#PAT #GROWTH 5 Year CAGR 25.5%

PAT stood at ₹1,093 cr, up by 19% YoY. Finance costs reduced by 1% due to lower borrowings, while depreciation expenses were up by 14%, due to higher facilities. Other income were higher by ~82%. Higher revenue growth & income and cost optimization helped offset the higher expenses leading to strong growth in profits. Forex gain during the year was ₹8.5 cr as compared to a loss of ₹13.3 cr. PAT in 9M FY25 stood at ₹1,004 cr, an increase of 29% over 9M FY24. Finance costs were higher by 32% YoY while depreciation decreased by 1% during the same period. Other income was higher by 23% YoY at ₹120 cr during 9M FY25. Other income included one-time gain of ~₹8 cr in Q2 FY25 owing to gain on closures of the Pune & Indore facilities. The forex gain during 9M FY25 was ~₹24 cr v/s ₹10 cr in 9M FY24.