HCL Tech Q4FY22 Results Preview: IT company may report mute earnings sequentially; P&P business likely come weak

IT major HCL Technologies is likely to report muted earnings sequentially, while it may present a double-digit growth in the top and bottom line, according to brokerages report. The technology company is scheduled to report its March quarter results on Thursday, as per the exchanges.  

Several brokerages see the quarter-on-quarter profit dipping marginally around 2.5 per cent, on the contrary, the revenue in rupee terms may grow between 2-5 per cent during the fourth quarter of the financial year 2021-22 (Q4FY22).  

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In dollar terms, the revenue of the IT company may also report around 2 per cent growth sequentially, the brokerages estimated. They believe the platforms and products business of the company to come weak during the March quarter. 

ICIC Direct Research  

P&P (Platforms and Products) business of HCL Tech would be weak for the quarter while we expect decent growth in IT services and ER&D business. We expect P&P business revenue to decline 18 per cent QoQ, implied Q4 numbers on the base of flattish to low single-digit growth guidance given for FY22 in this business.  

HCL Technologies is expected to report 2 per cent QoQ revenue growth in CC terms. The revenues will be partially offset by a cross-currency impact of 30 basis points for the quarter, dollar revenues are expected to up 1.7 per cent QoQ.  

EBIT margins for the quarter are expected to contract 80 basis points QoQ, due to negative operating leverage in P&P business and continued salary rationalisation amid high attrition. PAT (Profit After Tax) is expected to decline 3.4% QoQ. Key monitorable: FY23E revenue & margin guidance, commentary on deal pipeline especially multi-year as well as pricing 

JM Financial  

We are building in a 2.7 per cent QoQ CC growth with around 100 bps cross-currency headwinds. Expect EBIT margins to decline by 70 bps QoQ due to the weak seasonality of the product business and the continued supply-side investments in the Services business.  

Things to watch out for: performance and outlook in the Products and the Platform business; flow-through of the strong headcount addition and the Order booking into services revenue growth and FY23 revenue and margin guidance. We expect double-digit revenue growth outlook and EBIT margin band of 18-20 per cent. 

Yes Securities 

We expect growth in product business to be muted, while IT services would be able to maintain growth momentum Commentary on the Product and Platform business would be key to watch out for. The brokerage sees over 1 per cent growth in profit and around 3 per cent growth in revenue sequentially during Q4FY22.