HCL Tech to announce Q3 results on Thursday. Here's a preview of what to expect

IT services major HCL Technologies, which has tweaked its FY23 guidance to the lower end of the 13.5-14.5% growth band, is expected to report a consolidated revenue growth of around 3.2% sequentially in constant currency (CC) terms for the December quarter.

HCL Tech, shares of which have lost over 21% in the last year amid the worldwide tech crash, will announce its Q3 numbers post market trading hours on Thursday.

HCL Tech's profit after tax is expected to rise 5.5% QoQ to Rs 3,680 crore, while the EBIT margin may go up by 5.5%, according to forecasts by brokerages.

Here's what top brokerages expect from HCL Tech Q3 earnings:

Nomura
Nomura expects HCL Technologies to report a CC growth of 2.8% QoQ. It has also factored in a modest 110 bps margin improvement with a seasonally strong quarter and improved utilisation.

JM Financial
JM Financial estimates 3.1% QoQ CC revenue growth. "We have baked in an 80 bps wage hike headwind due to increments to mid to senior management layer in Q3," it said.

Kotak Institutional Equities
Pointing out that Q3 is seasonally a strong quarter for the products business, it has forecast sequential revenue growth of 3%, led by 2% c/c growth in services (IT services + ERD). "EBIT margin will increase sequentially despite wage revisions. We expect the EBIT margin to increase 30 bps QoQ and decline 70 bps YoY. Headwinds for the December 2022 quarter are wage revisions which will be offset by high revenue contribution from the high-margin products business and rupee depreciation," it said.

Motilal Oswal
The domestic brokerage expects the company to report 5% QoQ revenue growth in CC terms. Margin is likely to see an uptick of 60 bps QoQ aided by robust growth, rupee depreciation, and change in business mix.

Nirmal Bang
It expects the EBIT margin to expand QoQ by 60 bps. Higher-than-anticipated furloughs in Q3 will mean lower utilisation. The margin gains will likely be driven more by INR depreciation and due to a slight shift in revenue mix towards higher margin P&P business.

Axis Securities
It expects HCL Tech to report revenue growth of 3.4% QoQ in rupee terms. However, it is likely to post an operating margin expansion of only 30 bps.

Emkay Global
Emkay is building in 3.5% QoQ USD revenue growth after factoring in 20 bps cross-currency headwinds. The services business is expected to see a moderation in sequential growth due to furloughs and weakness in discretionary spending. The products and platforms segment is expected to report a sharp rebound sequentially, driven by seasonal strength. "We expect EBIT margin to expand by 100bps sequentially on account of operational improvement, rebound in the PPS segment’s profitability, and a weak rupee."

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)