HCL Tech Q3 preview: Firm likely to maintain revenue guidance of 5-6%

HCL Tech Q3 Preview: HCL Technologies, which is slated to declare its December quarter results (Q3 FY24) on Friday (January 11), is seen to be partially less impacted amid historically high furloughs. Zee Business Research desk estimates the company will post consolidated revenue of Rs 28,040 crore during the Q3 period as against Rs 26,672 crore in the preceding quarter, marking a 5.1 per cent increase quarter-on-quarter (QoQ).

In constant currency terms, the Noida-based technology major is seen to post 4.5 per cent growth on a sequential basis.

Besides, revenue in dollar terms is expected to edge higher by 4.4 per cent sequentially to Rs 336.7 crore in the quarter under review as against Rs 322.5 crore logged in the September-ended quarter.

Earlier, JM Financial stated in its report dated January 3 that HCL Tech will benefit from a year-end pick-up in software sales (+26% QoQ), the two-month incremental contribution of the ASAP acquisition, and the ramp-up of the Verizon deal.

Zee Business Research desk expects the IT services segment of the tech major to log 2 per cent growth, while its Engineering Research and Development department is seen to register 6 per cent growth.

Further, the estimates suggest that the company’s products and platforms (P&P) business line may log a substantial growth of 24 per cent QoQ.

Consequently, profit after tax (PAT), or the bottom line, is seen to soar by 7 per cent sequentially to Rs 4,100 crore as against Rs 3,832 crore in the previous quarter.

Additionally, the research desk expects that the company will retain its revenue guidance of 5–6 per cent while maintaining its margin guidance of 18–19 per cent for FY24.

Echoing a similar view, JM Financial also mentioned that any changes to FY24 guidance by the company, though unlikely, will be on the radar. Additionally, it expects that the IT major is likely to undershoot its FY24 cc organic growth guidance (3.7% vs. 4-5%).

Key monitorable

The key watch-outs, however, will be ER&D and product business, together with the deal's total contract value (TCV) outlook.

HCL Tech share price

Shares of the company have gained 18.73 per cent during the quarter under review. In comparison, the Nifty IT index has risen 12 per cent and the Nifty50 has risen 10.66 per cent.