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HCL Tech’s Q3 results are seen reducing downside risk to earnings and reinforcing confidence in its deal momentum and medium-term growth. But, most brokerages see the stock as fairly priced in the near term.
Net Sales are expected to increase by 3.9 percent Q-o-Q (up 9.2 percent Y-o-Y) to Rs. 31,530 crore, according to Prabhudas Lilladher.
HCL Technologies saw a 10 percent fall in consolidated net profit at Rs 3,843 crore for Q1FY26, as against Rs 4,257 crore in the year-ago period.
HCLTech has raised the lower band of its full-year revenue growth guidance by 100 basis points, setting it at 4.5-5 percent. Analysts interpret this revision as a sign of a weaker exit rate for Q4.
HCLTech's revenue growth guidance has been revised to 4.5-5 percent, up from the 3.5-5 percent range set in the previous quarter.
HCLTech CEO C Vijayakumar revealed that the company’s order books for the Americas and Europe markets have reached an all-time high.
HCLTech's revenue growth is projected to be driven by the low base of Q1FY25 and the ramp-up of recent deals.
Jefferies has a 'Hold' rating on HCLTech, while JPMorgan maintained a 'Neutral' stance, noting that cautious comments, signings, and guidance indicate ongoing challenges for the company.
Axis Securities predicts margin contraction due to higher onsite expenses, while ICICI Securities expects the EBIT margin to remain flat sequentially due to staggered wage hikes and the normalisation of products and platforms margin.
Revenue growth will be driven by the services business, which was boosted by the Verizon deal. In August 2023, HCL Tech signed a $2.1 billion deal with Verizon to provide managed network solutions to its global enterprise customers.
Deal wins were robust across the board but the overall macroeconomic environment remains shaky in the major markets of the US and EU
Q2 Earnings: While the IT sector has witnessed an uptick in order inflow over the past two months, the slowdown in project-based business is expected to hamper overall industry growth.
Dollar revenues are expected to be around $3.27 billion in the April to June quarter, a 0.8 percent growth sequentially and a 7.8 percent growth year-on-year.