HCL Tech Q3 PAT seen down 3.1% at Rs 555 cr

EBITDA too is expected to fall at Rs 945 crore from Rs 970.2 crore during the same period. EBITDA margin is seen falling at 17.94% versus 18.5%.

Revenues are seen going up by 0.4% to Rs 5,265 crore from Rs 5,245 crore QoQ.

In dollar terms, revenues are likely to go up by 2.34% to USD 1046 million from USD 1022 million.

Q3 expectations

Dollar revenues growth seen at 2.4% - higher than its peers (Infosys declined around 1.9%).
**Return to revenue outperformance versus peers. Investor concern has been a lack of revenue outperformance over peers despite lower margins. For the past two quarters, HCL has not outperforming its peers

Margins marginally lower. INR appreciation to put pressure but that will be offset partly by nonrecurring milestone employee bonus (which was paid in Q2).
**Management expects to maintain EBIT margins YoY in FY12e on constant currency terms at around 14% Investments in SG&A likely to continue on 2012.

Deal wins to be strong in Q3 also
**Q3 to be a strong quarter in deal wins due to USD 1 billion+ deal signed in Q2 (infact Q4 expected to be even stronger as these deals ramp up)
**Also HCL Tech has been betting on benefitting from the churn taking place in the market.

To watch: BPO turnaround and IMS needs to rebound

BPO business (5% of revenues) likely to turnaround this quarter. Undertaken restructuring and has always maintained that BPO turnaround in January-March quarter. Last quarter EBIT loss at USD 3.5 million

Infrastructure management services (IMS) pick-up after the weak performance in 2QFY12