HCLTech Q1FY25 preview: Net profit seen to decline 4.7% QoQ; margins to likely shrink by 70 bps

HCL Tech Q1FY25 preview, HCL share price: Noida-based IT services company HCL Technologies is set to report its Q1FY25 earnings on July 12. Amid global , the IT major is expected to post subdued April-June quarter with consolidated net profit slipping 4.7 per cent to Rs 3800 crore as against Rs 3,986 crore reported in the quarter ended March of the FY24.

The revenue at the company is expected to clock a 2 per cent decline sequentially from Rs 28,499 crore to Rs 27,930 crore in the reporting quarter. The revenue in dollar terms is estimated to fall by 2.1 per cent during the review period to Rs 335.9 crore as against Rs 343 crore in Q4FY24.

Furthermore, in constant currency terms, the revenue is estimated to log a degrowth by 2.3 per cent sequentially. InCred Equities held that the decline in the metric could be due to seasonal pass-back of productivity benefits. 

The company is expected to register Rs 4,718 crore in June-quarter earnings before interest and taxes (EBIT), marking a decline of 6.1 per cent on a sequential basis. EBIT in the previous quarter came in at Rs 5,024 crore. 

Margins at the software development and allied engineering services company are also seen to take a hit and are estimated to come in at 16.9 per cent  in the quarter-ended June as against 17.6 per cent in the March quarter, marking a fall of 70 bps.

At the business level, the company’s IT services domain is seen to register a 3 per cent fall on-quarter.

Meanwhile, the global tech player is estimated to maintain revenue and margin guidance for FY25 steady at 3-5 per cent and 18-19 per cent, respectively.

AnandRathi report on IT services’ Q1 preview said companies in the sector face higher visa costs and wage hikes, resulting in slightly lower Q1 margins. The US raised visa fees by around 70 per cent, which would result in sequentially lower margins in Q1.

Key monitorables in HCL’s Q1FY25 results 

FY25 guidance
Outlook on ERD/Products business
Deal Total Contract Values (TCVs) & pipeline. In the reporting quarter, the company won two deal from SBI and Apobank.

HCL share price 

Ahead of its earnings due to be released today, the scrip of HCL ended