HCL Tech Q1 results today; earnings preview & key things to watch

HCL Technologies Ltd (HCL Tech) is seen reporting a 4-8 per cent year-on-year (YoY) rise in profit for the June quarter on a 5-8 per cent increase in sales. Sequentially, it could report the worst numbers among tier I peers due to offshoring of a large client and productivity pass through for others, analysts said.

The IT firm, which would report Q1 earnings post market hours, is expected to retain its revenue growth guidance of 3-5 per cent in CC terms for FY25. It may also maintain the EBIT margin guidance of 18-19 per cent, analysts said. For the June quarter, Ebit margin is seen expanding 20-40 basis points YoY.

BOB Capital Markets expects HCL Tech to report 8.2 per cent YoY increase in profit at Rs 3,822 crore on 6.2 per cent YoY rise in sales at Rs 27,935.80 crore. Ebit margin is seen at 17.4 per cent, up 42 basis points YoY.

"Likely the worst QoQ growth numbers in 1QFY25 among Tier-1 peers – 2 per cent decline. This was flagged off during 4QFY24, largely due to offshoring of a large client and productivity pass through for others. Expect TCV to come in at $2-2.5 billion (entirely net new). Margin is a key monitorable especially in services as this has been quite volatile in the past and has in certain quarters surprised on the downside," BOB Capital Markets said.

Sharekhan expects HCL Tech to report sequential revenue decline of 2 per cent in CC terms with 10 bps cross-currency headwinds. Reported dollar revenue is seen falling 2.1 per cent QoQ, owing to the offshoring of a large contract and seasonal pass-back of productivity gains. EBIT margin is expected to decline 70 bps QoQ on lower revenue. It is profit for HCL Tech at Rs 3,534 crore, up 5.9 per cent. Sales is seen rising 6.5 per cent YoY at 28,012 crore.

Axis Securities said HCL Tech may report revenue de-growth of 1.6 per cent QoQ in rupee terms and operating margin contraction of 55 bps. It said investors would watch out for deal TCV, pricing scenario, and outlook on growth, operating margins, and P&P business. This brokerage sees YoY profit rising 7.7 per cent YoY on 7.6 per cent YoY growth in sales.