TCS, HCL Tech shares fall ahead of Q1 results. What analysts say

Shares of Tata Consultancy Services (TCS) and HCL Technologies (HCL Tech) fell marginally in Wednesday's trade ahead of the two IT giants' June quarter results. Both the technology firms are scheduled to report their Q1 numbers post market hours.

Shares of TCS, the largest IT major in terms of revenue, fell 0.14 per cent to Rs 3,267.15 on BSE. HCL Technologies, on the other hand, declined 0.24 per cent to Rs 1,112.05. 

TCS is seen clocking a 15-20 per cent rise in year-on-year (YoY) profit on a double-digit growth in sales for the June quarter. While Ebit margin is seen expanding on a year-on-year basis, wage hikes may hit the sequential print. Analysts though sees the impact to be lower, partly negated by operating efficiencies, employee pyramid rationalisation and cross-currency tailwinds. Deal wins are seen in the $11-12 billion range.

HCL Technologies, on the other hand, is seen reporting profit and sales growth in double-digits on year-on-year (YoY) basis. Analysts largely expect HCL Tech to retain its FY24 revenue growth guidance of 6-8 per cent and also 18-19 per cent EBIT margin guidance for the ongoing financial year. Kotak, though, sees FY24 revenue growth at the lower end of the guidance.

For HCL Tech, investors would be eyeing, deal wins, updates to FY24 guidance, the management commentary on state of ERD demand and the reason for seeming disconnect in growth of HCL Tech versus peers and growth in apps in light of deteriorating discretionary spending.

For TCS, analysts said eyes will be on any commentary suggesting the possibility of an uptick in H2 as H1 played out in a muted manner. Demand trends in key verticals like BFSI, Retail, Manufacturing and Communications would be watched, so would the deal intake in Q1 and deal pipeline. Investors would want to know about the pricing environment, considering macro uncertainties and deal mix shift towards cost takeouts.

Hiring plan amid slowing growth and macro uncertainties would also be something investors would want to know about on Wednesday.

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