HCL Technologies Limited
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Briefing
HCL Technologies Limited — the brief
Forensic posture: Material flags. The auditor gave an unqualified clean bill, earnings quality is excellent across 11 models, and academic risk scores show the company is financially strong; the main disclosure flag is ₹3,099 Cr in income tax demands across multiple appeal forums (9% of net worth), alongside a 34% YoY surge in subsidiary receivables to ₹10,752 Cr.
Auditor’s report (CARO 2020)
Auditor’s assessment Clean. Auditor: B S R & Co. LLP. Opinion: Unqualified. Fiscal year FY25-25.
Related-party transactions
Assessment Notable. 18 related parties disclosed. Fiscal year FY24-25.
- Large subsidiary receivables up 34% YoY: Trade receivables from related parties (subsidiaries) grew from ₹8,006 Cr to ₹10,752 Cr (+34% YoY), representing ~73% of total current billed+unbilled trade receivables of ₹14,685 Cr; the full RPT note was not present in this excerpt to ass
Contingent liabilities
Assessment Concerning. Total disclosed: ₹3,523 Cr (10.1% of net worth). Fiscal year FY24-25.
- Income tax demand pending before CIT(Appeals), FY2003-04 to FY2021-22
- Income tax demand at ITAT Delhi, FY2004-05 to FY2010-11
- Income tax demand at Supreme Court of India, FY2002-03 to FY2004-05
Corporate governance
Board of 15 directors, 73% independent. Chair: Roshni Nadar Malhotra. Chair and CEO roles are separated. Statutory auditor: M/s. B S R & Co. LLP. Fiscal year FY24-25.
“Includes receivables from related parties amounting to ₹10,752 crores (31 March 2024, ₹8,006 crores).”
What retail misses·The ₹3,099 Cr income tax demand spanning 19 years of tax years and multiple appellate forums is disclosed in contingent liabilities but gets buried in footnotes—it is material at 9% of net worth and the ultimate burden depends entirely on which way the appeals go, yet earnings headlines treat it as already resolved or immaterial.
Strengths noted in disclosures: Auditor opinion is unqualified and clean with zero high, material, or minor flags in the CARO report. · Earnings quality composite score of 92/100 (Excellent) confirms cash profits match reported earnings, with low manipulation risk and top-decile profitability. · Altman Z-score of 7.79 places the company in the Safe zone with low bankruptcy risk; Piotroski F-score of 7/8 shows financially strong fundamentals.
Forensic signal
From the company's own filingsStrong: Momentum · Valuation · Yield · Size · Weak: 52-Week