680-2400% Dividends Paid: Here's What Investors Need To Know Ahead Of Infosys, HCL Tech Q2 Numbers

Two heavyweight IT stocks, Infosys and HCL Tech are trading on a cautious note ahead of their Q2 numbers of Thursday. Both companies are expected to report single-digit growth in revenue, while EBIT margins are seen as healthy. Not just that, the two which are among dividend king stocks, are also going to reward investors with dividend recommendations. Both companies paid dividends in the range of 680% to 2400% in the previous fiscal.

Both Infosys and HCL Tech are among the top 3 Indian IT companies in terms of market share with TCS on the top.

Infosys:

At the time of writing, Infosys shares traded at Rs 1,485.65 apiece, down by 0.54% on BSE. The stock traded in the range of Rs 1,504.50 apiece to Rs 1,484 apiece so far in the day.

Infosys is the second-largest IT firm in India in terms of market share. Ahead of earnings, its market value is over Rs 6.16 lakh crore.

Apart from Q2 numbers, the company informed earlier that it will also consider the declaration of interim dividend, if any on Thursday. This will be Infosy's first interim dividend for FY24.

However, Infosys has a consistent track record of rewarding its shareholders with hefty dividends. In FY23, the company paid a dividend of 680% amounting to Rs 34 per share to investors.

In its Q2FY24 earnings report, Dhruv Mudaraddi, Research Analyst, StoxBox said, "Infosys is expected to reveal relatively subdued financial performance as the demand environment has not seen much change since the June quarter barring a few mega deal closures. We expect certain pockets in banking and financial services and discretionary spending in retail to witness continued pressure."

Mduraddi added, "We expect a single-digit annual revenue growth, with CC revenue growth likely to remain flat. The focus will be on management commentary regarding deal pipelines and the execution of recently secured deals. The company is also expected to report a strong deal pipeline which grew 35% YoY in Q1FY24. However, the deal wins during this quarter will only start reflecting in revenues from Q4FY24 onwards. The company is likely to uphold its revenue guidance, leveraging its strong deal wins to secure a robust position in the latter half of the fiscal year."

HCL Tech:

Also in red, HCL Tech traded at Rs 1,242 per share, marginally down by 0.30% on BSE. The stock performed in the range of Rs 1,249.95 to Rs 1,238.75 per share so far in the day.

HCL Tech is the third largest IT company in terms of market value in India. At the current market price, its market cap is over Rs 3.36 lakh crore.

Alongside Q2 results, HCL Tech will declare a third interim dividend for the fiscal. It has already set October 20th as the record date to determine eligible shareholders for the third interim dividend payout. The IT player has already paid a first and second interim dividend of Rs 18 per share (900%) and Rs 10 per share (500%) for the financial year 2023-24 so far.

During the financial year FY23, the company paid a total dividend of 2400% aggregating to Rs 48 per share.

For HCL Tech in the September 2023 quarter, Axis Securities said, "We expect Wipro to report revenue de-growth of 0.5% QoQ in rupee terms. Its Operating Margins, too, are likely to contract aided by a wage hike of 238bps. Key monitorables would be a) Deal TCV/pipeline, b) Pricing scenario, and c) Outlook on new deals."

While Nuvama said, "HCL Tech's revenue to grow 1.3% QoQ in CC and 1.2% QoQ in USD - driven by IT Services (+1% QoQ) and ER&D (+3% QoQ) while P&P (flat QoQ) to remain muted. ER&D will bounce back after reporting a decline in the last two quarters. EBIT margin to improve 30bps QoQ. Dealflow is expected to be strong. We expect HCLT to maintain its FY24 revenue (6-8% CC YoY growth) and margin (18-19%) guidance."

Disclaimer:

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