HCL Technologies Ltd is all set to report its quarter results post market hours. Larger peer Tata Consultancy Services Ltd last week reported muted earnings but better-than-expected deal wins. Will HCL Tech surprise investors?
HCL Tech is expected to be the growth leader among Tier I, with about 4.6-5.5 per cent sequential constant currency (CC) growth, due to seasonality of its software business and one-month consolidation of recently acquired Communications Technology Group (CTG). This is despite a likely impact wage hikes and furloughs. Deals wins are likely in the range of $2-2.5 billion. A few analysts even see HCL Tech to increase its FY25 revenue guidance.
Prabhudas Lilladher sees the IT major to report 3.9 per cent YoY rise in net profit at Rs 4,520 crore against Rs 4,350 crore in the same quarter last year. Revenue is seen rising 6 per cent YoY to Rs 30,200 crore from Rs 28,450 crore. Ebit margin is seen contracting 54 basis points YoY to 19.2 per cent from 19.7 per cent, but is seen improving 62 basis points QoQ over 18.6 per cent in the September quarter.
JM Financial sees profit rising 8.5 per cent YoY to Rs 4,593.50 crore on 5.3 per cent rise in sales at Rs 30,393 crore. Ebit margin is seen at 19.1 per cent.
"We have built $20 million contribution from one-month consolidation of CTG. We are building 1.5 per cent/1.5 per cent/25 per cent QoQ growth in IT Services/ERS/Product & Platform business in USD terms. We expect 50bps EBIT margin expansion aided by higher contribution of Software sales; Wage hike (down 75bps QoQ) will be a key headwind," JM Financial said.
Nuvama said it expects HCL Tech to marginally upgrade FY25 revenue growth guidance to 4-5 per cent CC YoY growth from 3.5-5 per cent earlier. It sees Q3 profit for HCL Tech rising 13.1 per cent YoY to Rs 4,790 crore and sales 4.3 per cent YoY to Rs 30,110 crore.
"While ER&D and manufacturing could continue to be soft owing to challenges from the German automotive sector, a revival in Hi-tech discretionary spending is anticipated," MOFSL said.
It sees margins expanding 50bp QoQ, led by a seasonally strong quarter for the software business and operating leverage, despite a 65-80 bps wage hike impact and furloughs.
The brokerage expects the IT firm to retain its FY25 revenue growth guidance.
Along with its quarterly results, the HCL Tech management would consider paying dividend. Later today, the senior management of HCL Technologies will conduct audio conference call at 7:30 pm IST for 60 minutes to discuss the results followed by the detailed question-answer session.