HCL Q2 Results: HCLTech Ltd. will be declaring its September quarter results today, October 12 and is expected to report growth in the constant currency (cc) revenue in Q2FY24 after a consecutive decline in the preceding two quarters.
The recovery, analysts said, will be aided by the contribution from its acquisition of the German automotive engineering company ASAP Group.
Brokerage Motilal Oswal pegs the highest sequential cc revenue growth of 3.6 per cent without assuming contribution from the ASAP deal. Others see this in a modest range of 0.5-1.1 per cent.
The growth, Motilal Oswal said, would be aided by the recovery in the engineering and R&D services (ERD).
D-Street analysts and domestic brokerages widely expect India’s third-largest IT services major to report softer growth in the September quarter and reduce its revenue guidance to 4-6 per cent from 6-8 per cent.
According to domestic brokerage firm JM Financials, HCL Tech is likely to see a modest improvement in growth and margin expansion during the quarter-under-review. “A likely soft 2Q and only a modest improvement in 2H should therefore induce guidance cut or moderation in outlook for most, except Infosys.
Recently, HCL Tech had announced that the wage hike cycle will be skipped for the mid-level and senior employees, while that for the junior employees has been pushed back to the October-December quarter of current fiscal.
In the preceding April-June quarter of current fiscal, HCL Tech reported a 7.6 per cent year-on-year growth in consolidated net profit. The IT major’s profit after tax declined by 11.27 per cent in Q1FY24, compared to of ₹3,983 crore in the preceding March quarter of fiscal 2022-23.
A significant drop in its Engineering Research & Development (ER&D) revenue led to a decline in the company’s June quarter revenue. The ER&D business accounts of 15.4 per cent of the company’s overall revenue and the business saw a sequential drop of 5.2 per cent sequentially and 1.8 per cent year-on-year due to project ramp-down in hi-tech and telecom.
HCL Tech’s EBIT, or earnings before interest and tax, a key metric of profitability, came in at ₹4,438 crore in the June as against ₹4,836 crore in the preceding quarter, according to the brokerage.
Meanwhile, last month, HCL Technologies share price touched a fresh 52-week high after following the signing of a multiyear Managed Public Cloud Services agreement with German technology and high-tech industry behemoth Siemens AG.
For the quarter, the company’s net new deals are likely to be very high aided by the Verizon deal. That will come after a disappointing TCV number of $1.6 billion in the June quarter.
While Kotak is forecasting TCV to be $4 billion, Morgan Stanley sees deal wins between $3 billion to $3.5 billion, both comfortably higher than the average of $2 billion over the last seven quarters.
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