HCL Tech Poised for Double-Digit Profit Surge on Seasonal Boost

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AuthorIshaan Verma|Published at:
HCL Tech Poised for Double-Digit Profit Surge on Seasonal Boost
Overview

HCL Technologies is set for a strong Q3 performance, with analysts forecasting double-digit profit growth driven by seasonal tailwinds in its products division. Favorable currency movements and AI productivity gains are also expected to bolster margins. Investors will watch for commentary on large deal closures and sector-specific performance.

HCL Tech Eyes Robust Q3 Profit Growth Amid Seasonal Tailwinds

Profit Projections

HCL Technologies is anticipated to post a significant double-digit increase in its third-quarter profit, driven largely by seasonal factors and a robust performance in key business segments. The IT major is scheduled to announce its earnings for the quarter ending December on Monday, January 12.

Analysts widely expect net profit to surge approximately 12.9% sequentially, reaching around ₹4,784.5 crore. On a year-over-year basis, profit growth is projected to be around 4.22%. This uplift is underpinned by anticipated margin improvements.

Revenue Outlook

Consensus estimates suggest HCL Technologies' revenue will climb 4.2% quarter-on-quarter to ₹33,282.2 crore. This growth is attributed to favorable seasonality in the products business, enhanced productivity from artificial intelligence initiatives, and the advantageous impact of a weaker rupee.

Margin Drivers

Margin improvement is a key expectation for the quarter. Analysts foresee a potential gain of 70-80 basis points, supported by stronger performance in the software business and operating leverage. Despite this, the impact of wage hikes and furloughs will be closely monitored.

Brokerage Views

Brokerage firms offer mixed but generally positive outlooks. Motilal Oswal anticipates constant currency (CC) revenue growth of 2.3% Q-o-Q, with a positive view on BFSI and hi-tech segments, while cautioning on manufacturing and auto. Nomura expects CC revenue growth of 3.4% and improvement in Ebit margin by 80 basis points. Kotak Securities forecasts an Ebit margin expansion of 100 basis points to 18.5%, driven by seasonal product strength and large deal ramp-ups. Several brokerages predict net new deal wins exceeding $2-2.5 billion, largely due to one significant deal closure.

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