The next hot Q4 result in the IT sector is HCL Tech which will present its financial earnings on April 20. HCL’s peers TCS and Infosys have already announced their Q4 results and they both have missed estimates cautioning investors in the sector going forward broadly. Will HCL Tech meet the same fate as its peers, this is something that everyone is wondering! Experts believe HCL may achieve its FY23 revenue and margins guidance. PAT is seen in double-digit percentage growth on both a sequentially and annual basis in Q4FY23. The company’s board will also consider the first interim dividend for FY24 on Thursday.
The next hot Q4 result in the IT sector is HCL Tech which will present its financial earnings on April 20. HCL’s peers TCS and Infosys have already announced their Q4 results and they both have missed estimates cautioning investors in the sector going forward broadly. Will HCL Tech meet the same fate as its peers, this is something that everyone is wondering! Experts believe HCL may achieve its FY23 revenue and margins guidance. PAT is seen in double-digit percentage growth on both a sequentially and annual basis in Q4FY23. The company’s board will also consider the first interim dividend for FY24 on Thursday.
On Tuesday, HCL Tech emerged as the top gainer on exchanges ahead of its earnings. The company’s stock ended at ₹1,063.50 apiece up by 1.99% on BSE.
On Tuesday, HCL Tech emerged as the top gainer on exchanges ahead of its earnings. The company’s stock ended at ₹1,063.50 apiece up by 1.99% on BSE.
On April 20, apart from announcing Q4 earnings and the full-year FY23 financial report, HCL Tech board members will also consider payment of interim dividends for the financial year 2023-24.
On April 20, apart from announcing Q4 earnings and the full-year FY23 financial report, HCL Tech board members will also consider payment of interim dividends for the financial year 2023-24.
During the third quarter of FY23, HCL Tech posted a consolidated net profit of ₹4,096 crore up 19% YoY. In this quarter, the IT major surpassed estimates on the back of strong deal wins. Revenue stood at ₹26,700 crore higher by 19.5% YoY. In terms of constant currency, HCL Tech posted revenue growth of 5% QoQ and 13.1% YoY. The company’s attrition rate dropped significantly to 21.7% in Q3FY23.
During the third quarter of FY23, HCL Tech posted a consolidated net profit of ₹4,096 crore up 19% YoY. In this quarter, the IT major surpassed estimates on the back of strong deal wins. Revenue stood at ₹26,700 crore higher by 19.5% YoY. In terms of constant currency, HCL Tech posted revenue growth of 5% QoQ and 13.1% YoY. The company’s attrition rate dropped significantly to 21.7% in Q3FY23.
At that time, HCL Tech narrowed its revenue and margin guidance band. FY23 revenue growth is now seen at 13.5-14% in constant currency and the EBIT margin is now seen at 18-18.5%.
At that time, HCL Tech narrowed its revenue and margin guidance band. FY23 revenue growth is now seen at 13.5-14% in constant currency and the EBIT margin is now seen at 18-18.5%.
What to expect in Q4?
In its preview report, ICICI Securities said, “We expect HCL to report 6.1% CC revenue growth in FY24E and hence start with annual revenue growth guidance of 5-7% in CC terms for FY24E. On EBIT margin guidance, we expect it to be 18-19% for FY24E after clocking 18.4% in FY23E. For Q4FY23E, we expect HCL results to be the weakest in our coverage universe in terms of CC QoQ growth at just -1.9% due to weak seasonality at product & platform business. HCL is currently trading at 19% discount to NIFTY IT, which is same as last 16-year average. Our revised 12-month target price of Rs1,122 (based on 16x FY26E EPS of Rs79, discounted back by WACC of 12%) implies a 5% potential upside. Reiterate HOLD.”
What to expect in Q4?
In its preview report, ICICI Securities said, “We expect HCL to report 6.1% CC revenue growth in FY24E and hence start with annual revenue growth guidance of 5-7% in CC terms for FY24E. On EBIT margin guidance, we expect it to be 18-19% for FY24E after clocking 18.4% in FY23E. For Q4FY23E, we expect HCL results to be the weakest in our coverage universe in terms of CC QoQ growth at just -1.9% due to weak seasonality at product & platform business. HCL is currently trading at 19% discount to NIFTY IT, which is same as last 16-year average. Our revised 12-month target price of Rs1,122 (based on 16x FY26E EPS of Rs79, discounted back by WACC of 12%) implies a 5% potential upside. Reiterate HOLD.”
Meanwhile, Motilal Oswal in its report said, “We expect HCLT to report muted growth due to a seasonal drag in HCL Software.” It further expects the margin to decline 150bp QoQ largely due to a seasonal decline in HCL Software. However, the brokerage believes the company’s IT Services to remain strong in 4QFY23.
Meanwhile, Motilal Oswal in its report said, “We expect HCLT to report muted growth due to a seasonal drag in HCL Software.” It further expects the margin to decline 150bp QoQ largely due to a seasonal decline in HCL Software. However, the brokerage believes the company’s IT Services to remain strong in 4QFY23.
Motial expects HCL Tech to post revenue of ₹27,200 crore in Q4FY23 up by 20.3% YoY. EBITDA likely at ₹6,400 crore with a margin of 23.8% in the quarter. Adjusted PAT is factored around ₹4,100 crore with an upside of 19% YoY and 17.4% QoQ.
Motial expects HCL Tech to post revenue of ₹27,200 crore in Q4FY23 up by 20.3% YoY. EBITDA likely at ₹6,400 crore with a margin of 23.8% in the quarter. Adjusted PAT is factored around ₹4,100 crore with an upside of 19% YoY and 17.4% QoQ.
Further, according to B&K, the management maintained the guidance of Services revenue to grow in the range of 16% to 16.5% in CC terms. That being said, the company has recorded a growth of 17.8% in 9MFY23, hence, it requires about 2% QoQ growth in Q4FY23 to achieve the guidance which is likely to happen. Overall, HCL’s revenue is seen in the range of 13.5% to 14% YoY in CC terms. Notably, HCL has a cross-currency tailwind in Q4.
Further, according to B&K, the management maintained the guidance of Services revenue to grow in the range of 16% to 16.5% in CC terms. That being said, the company has recorded a growth of 17.8% in 9MFY23, hence, it requires about 2% QoQ growth in Q4FY23 to achieve the guidance which is likely to happen. Overall, HCL’s revenue is seen in the range of 13.5% to 14% YoY in CC terms. Notably, HCL has a cross-currency tailwind in Q4.
Also, B&K highlighted that for FY23, the margin will be a maximum of 18.5% now and the management even believes with higher investment, the overall margin may be to the tune of 18% to 18.5%. B&K believes that the company may achieve this margin in Q4 and could even reach 19%. In 9MFY23, margins stood at 18.2%.
Also, B&K highlighted that for FY23, the margin will be a maximum of 18.5% now and the management even believes with higher investment, the overall margin may be to the tune of 18% to 18.5%. B&K believes that the company may achieve this margin in Q4 and could even reach 19%. In 9MFY23, margins stood at 18.2%.
Moreover, IDBI Capital expects HCL’s expect revenue growth (in CC) terms to decrease by 1% QoQ with a cross-currency tailwind of 15 bps — mainly due to seasonal softness in product revenue. While EBIT margin may taper down by 99 bps QoQ mainly led by a decline in revenue growth.
Moreover, IDBI Capital expects HCL’s expect revenue growth (in CC) terms to decrease by 1% QoQ with a cross-currency tailwind of 15 bps — mainly due to seasonal softness in product revenue. While EBIT margin may taper down by 99 bps QoQ mainly led by a decline in revenue growth.
Among key things to watch in Q4 as per IDBI Capital for HCL Tech are — 1) Outlook on product business 2) Outlook on ER&D business given the turmoil in Europe; 3) Commentary on the deal pipeline, especially large deals, and pricing 4) attrition trend 5) Margin outlook; 6) M&A plans; 7) tech spends by clients.
Among key things to watch in Q4 as per IDBI Capital for HCL Tech are — 1) Outlook on product business 2) Outlook on ER&D business given the turmoil in Europe; 3) Commentary on the deal pipeline, especially large deals, and pricing 4) attrition trend 5) Margin outlook; 6) M&A plans; 7) tech spends by clients.
