HCL Tech Q3 Results Preview: Right after TCS earnings, its rival HCL Technologies which is backed by philanthropist Shiv Nadar, will now be in focus on Monday, January 13th for its third quarterly results of FY25. HCL Tech's quarterly performance is expected to be better than that of TCS. Apart from Q3, HCL Tech will also declare a fourth interim dividend for the fiscal. Experts are forecasting an uptick in revenue and EBIT margins in Q3FY25 for HCL, while guidance is expected to range from 4.5% to 5% for IT services revenue.
HCL Tech Share Price:
Ahead of Q3, In the opening bell, HCL Tech's share price traded at Rs 1977.50 apiece, at the time of writing, which was lower than 0.91% with market cap of Rs 5,36,627.27 crore. The stock opened at Rs 1996 apiece. In the pre-market trading of January 13, HCL Tech stood at Rs 2005 apiece on BSE, up by 0.5%, which was higher than its 52-week high before opening lower.
Nonetheless, HCL Tech stayed near its 52-week high of Rs 2,001.40 apiece.
HCL witnessed massive buying on January 10th last week, with share price gaining by 3.13% on BSE to end at Rs 1995.60 apiece. The company's market cap stood at Rs 5,41,539.01 crore.
HCL Tech Q3 Results Preview:
As per the regulatory filing, HCL Tech informed stock exchanges that a meeting of the Board of Directors of the Company is scheduled to be held on Monday, January 13, 2025, to consider unaudited Financial Results of the Company for quarter and nine months ending December 31, 2024.
Brokerage Kotak Institutional Equities in its Q3 preview report said, "We forecast 4.4% revenue growth in c/c. Growth will be led by (1) a 26% QoQ increase in the products business. We forecast product revenues of US$416 mn and (2) 1.8% growth in IT services, which includes a 35 bps contribution from the CTG acquisition. We expect a 70 bps increase in EBIT margins, largely due to the seasonal strength in the products business. We forecast an EBIT margin of 34% in products, stable yoy and up 800 bps qoq. This will offset the 50-75 bps impact of wage revision."
Further, the brokerage expects TCV of net new deals at US$2.2 bn, similar to the earlier quarter. We expect revenue growth guidance revision to 4.5-5% on an organic basis.
Meanwhile, Indsec Research expects cc qoq growth of +3.5% to +4.6% on the back of a seasonally strong quarter for the HCL Software business and robust IT services growth including CTG acquisition. This will be offset by a cross-currency headwind.
In the case of EBIT margins, IndSec expects the indicator to expand by 93bps qoq owing to strong product business. Wage hikes to impact margins in 3Q. Also, the brokerage predicts net New deal wins to be between $2-$2.4bn. Lower band of the margin guidance.
Investors key focus areas in HCL Tech's Q3 should be on --- (1) new deal TCV that has been fairly most in the last few quarters, (2) impact to revenues, if any, from the Verizon deal anniversary, (3) the outcome of the annual client budgeting exercise and what it means for discretionary spending and (4) environment required to hit aspirational margin band of 19-20%, as per Kotak.
During Q2FY25, HCL Tech reported consolidated PAT of Rs 4,235 crore, registering a growth of 10.51% year-on-year. Consolidated revenue jumped by 8.21% year-on-year to Rs 28,862 crore, driven by key deal wins across verticals. In constant currency, HCL Tech's Q2 revenue growth stood at 1.6% QoQ and 6.2% YoY. In dollar terms, HCL reported revenue of $3,445 million, which rose by 2.4% QoQ & up 6.8% YoY.
In the previous quarter, HCL Tech raised its lower-end revenue guidance for FY25 to 3.5% from the earlier 3%, while retaining the upper-end target of 5% YoY growth in constant currency. Further, the company's Services Revenue growth is expected to be between 3.5% - 5.0% YoY in CC. Lastly, EBIT margin is factored to be between 18.0% - 19.0%.
HCL Tech Interim Dividend:
The tech giant will also announce fourth interim dividend for FY25 on January 13.
Last year, for FY25, HCL Tech delivered third interim dividend of Rs 12 per share and its ex-date was on October 22. While the second interim dividend was of Rs 12 per share too, with ex-date on July 23. Lastly, the first interim dividend of Rs 18 per share had an ex-date of May 7 in 2024.
The fourth interim dividend will be the first dividend payout in 2025.
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