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HCL Technologies Ltd. is poised to release its third-quarter financial results, generating significant anticipation within the investment community. The upcoming announcement follows the release of Tata Consultancy Services Ltd.'s (TCS) results, which, while showing muted earnings, indicated stronger-than-expected deal wins. This sets the stage for HCL Tech's performance, with investors keenly observing whether the company will exceed expectations.
Analysts are forecasting robust growth for HCL Technologies in the third quarter. Predictions point towards a sequential constant currency (CC) growth rate of 4.6% to 5.5%, driven primarily by the seasonal nature of its software business and the recent acquisition of the Communications Technology Group (CTG), which will contribute to the results for one month of the quarter. This growth is predicted despite anticipated headwinds from wage increases and potential furloughs. Furthermore, deal wins are expected to fall within the range of $2 billion to $2.5 billion.
Various financial institutions have offered their specific projections for HCL Tech's Q3 performance. Prabhudas Lilladher anticipates a 3.9% year-on-year (YoY) increase in net profit, reaching approximately Rs 4,520 crore (compared to Rs 4,350 crore in the same quarter of the previous year). Their revenue forecast stands at a 6% YoY rise, reaching Rs 30,200 crore (from Rs 28,450 crore). While a contraction in the Ebit margin to 19.2% (from 19.7%) is predicted, a sequential improvement from the September quarter's 18.6% is also anticipated. JM Financial provides a slightly more optimistic outlook, projecting an 8.5% YoY increase in profit (Rs 4,593.50 crore) and a 5.3% rise in sales (Rs 30,393 crore). They estimate the Ebit margin at 19.1%. Nuvama, another financial institution, suggests a marginal upward revision in HCL Tech's FY25 revenue guidance, to a range of 4-5% CC YoY growth (from the previous 3.5-5%). Their Q3 profit prediction stands at Rs 4,790 crore (a 13.1% YoY increase), with sales projected at Rs 30,110 crore (a 4.3% YoY increase).
The differing forecasts highlight the inherent uncertainties and nuances involved in predicting the performance of a large IT company. While some analysts anticipate strong growth driven by factors like the CTG acquisition and a seasonally strong software business, others acknowledge potential headwinds from wage hikes and challenges within specific sectors, such as the German automotive industry. The differing views on whether HCL Tech will maintain or revise its FY25 revenue guidance also contribute to the overall uncertainty surrounding the upcoming earnings report. MOFSL's perspective, highlighting potential softness in ER&D and manufacturing sectors and a projected revival in high-tech discretionary spending, adds another layer of complexity to the predictions.
Beyond the financial figures, the earnings announcement is anticipated to include a potential dividend payout. This adds another element of interest for investors, making the upcoming call a crucial event. The management will host an audio conference call later in the day to discuss the results and engage in a question-and-answer session, providing further clarification and details on the company's performance and future outlook. The consensus seems to suggest a positive outlook for HCL Tech, with strong growth potential balanced by potential challenges within specific market segments. The actual results will likely provide critical insights into the overall health of the IT sector and HCL Tech's positioning within it.
Source: HCL Tech Q3 results preview, dividend, earnings call timing & more