HCL Tech Q3 PAT likely to grow 10% QoQ; co to retain FY24 revenue, margin guidance, says Nuvama

IT major HCL Technologies is expected to report a 10.3% sequential jump in its December quarter net profit at Rs 4,227.50 crore aided by improvements in margins according to estimates by Nuvama. The net profit is seen growing by 3.2% on a year-on-year basis. The company will declare its third quarter earnings on January 12.

The company had reported a net profit of Rs 3,832 crore in the September quarter while a profit after tax (PAT) of Rs 4,097 crore in the corresponding period of the last financial year.

Nuvama sees the October-December topline to grow by 4.9% quarter-on-quarter at Rs 27,985 crore versus Rs 26,672 crore reported in Q2FY24. On the YoY basis, revenue will likely be up by 4.8% over Rs 26,700 crore reported by HCL in Q3FY23.

Earnings before interest and taxes (EBIT), which is a measure of the company’s profitability, will likely go up by 8.3% QoQ and 2.2% on the YoY basis at Rs 5,343.20 crore for the said quarter, Nuvama said in the note. In Q3FY23, the company had reported EBIT at Rs 5,229 crore and the same stood at Rs 4,934 crore in Q2FY24.

HCL’s EBIT margin is expected at 19.1% for the December 2023 quarter, up by 59 bps from 18.5% reported by the company in Q2FY24. However, it will be lower by 49 bps from 19.6% reported in the year-ago period.

In the constant currency (CC) terms, the topline is expected to grow by 4.6% QoQ while in the dollar terms a 4.2% QoQ jump is seen, Nuvama said. The revenue hike will likely be driven by services (+2.5% QoQ) and P&P (+20% QoQ, seasonality impact) segments. Services growth is likely to be driven by Verizon deal and ASAP acquisition, the report said further.

Nuvama expects HCL Tech to maintain its FY24 revenue (4.5–5.5% CC YoY growth in services) and margin (18–19%) guidance.The brokerage holds a positive view on HCL Technologies stock, which ended at Rs 1,420.50 on the NSE, down by Rs 17.25 or 1.20%.

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