IT major HCL Technologies (HCL), which is set to announce its financial results for January-March 2024 (Q4 FY24) on Friday, April 26, is expected to post a flat revenue on a quarterly basis amid weak products and platforms (P&P) business, according to analysts. However, the company’s services segment is likely to provide some filip.
According to brokerage Motilal Oswal, HCL Tech’s Q4 revenue in rupee terms is expected to grow 7.9 per cent YoY. However, on a quarter-on-quarter basis, the HCL Tech revenue may be flat for the March 2024 quarter.
However, its services revenue may grow 2.7 per cent QoQ in constant currency (CC) terms, according to Motilal Oswal.
Its adjusted profit after tax (PAT) may have increased 6.8 per cent YoY during Q4 FY24. However, quarterly performance may actually show a drop of 2.3 per cent, it said.
As far as HCL Tech’s EBIT is concerned, HCL is likely to report a 10.4 per cent YoY jump. However, it is also expected to decline by 5.4 per cent on on a QoQ basis. The brokerage also indicates a 120 bps QoQ fall in EBIT margin.
Another brokerage Nuvama Wealth in a note said, “HCLTech’s revenue shall grow 0.3 percent QoQ in CC (constant currency) and 0.7 percent QoQ in USD, due to Services (+2.4 percent QoQ) and P&P (-15 percent QoQ, seasonality impact). Services growth shall be driven by the Verizon deal and reversal of furloughs.”
Brokerage Nirmal Bang expects HCL’s revenue in rupee terms rising 7.6 per cent YoY. However, it also expects a flat QoQ rise of 0.6 per cent in revenue. The company is likely to announce a growth of 6.2 per cent YoY in PAT, while its sequential performance may fall 2.8 per cent.
Growth Outlook For FY25
On growth outlook, the brokerage said the company may announce a revenue growth guidance (CC terms) of 4-7 per cent for FY25.
On growth guidance, Motilal Oswal said the company may provide an initial FY25 revenue guidance of nearly 10 per cent. For EBIT margin, it is expected to announce stable-to-improving numbers.
Products and Platforms Business
HCL’s P&P business is expected to decline due to seasonality. According to Motilal Oswal, “The decline in the high-margin P&P business should result in a 120-bps QoQ decrease in profitability during Q4”.
ICICI Securities expects a 12 per cent contraction in the P&P business due to a “lack of positive seasonality from Q3FY24”.
Philip Capital also said margins will be affected by “P&P seasonality, partial wage hikes, and the Verizon deal impact”.
TCS, Infosys and Wipro have already announced their financial results, which were weak amid lower discretionary spendings. TCS reported a 9.1 per cent growth in its March 2024 quarter net profit at Rs 12,434 crore. Infosys posted a 30 per cent year-on-year jump in its net profit to Rs 7,969 crore for the fourth quarter ended March 2024 quarter.
Wipro on April 19 reported an 8 per cent year-on-year decline in its net profit to Rs 2,835 crore for the March 2024 quarter.
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