IT services company HCL Technologies is expected to deliver a strong top-line performance in the December quarter, aided by seasonality in products and ER&D services, currency tailwinds, and ramp-up of large deal wins. An average of five brokerages estimates revenue growth of about 12% year-on-year, while profit after tax (PAT) is seen growing around 5% YoY, reflecting margin recovery tempered by restructuring costs and wage hikes.
Brokerages expect quarter-on-quarter revenue growth of 4–5%, placing HCL Tech among the faster-growing large-cap IT services peers for the quarter.
Axis Securities expects 4.5% sequential growth, driven primarily by seasonal uptick in ER&D and software businesses. Kotak Equities, while more conservative on services growth, expects 1% QoQ expansion in services, with products seasonality contributing an incremental 180 basis points to overall revenue growth.
The ramp-up of large deals won over the past few quarters is expected to aid growth visibility, even as discretionary spending remains selective across verticals.
YES Securities estimates EBITDA margins to expand by about 145 bps sequentially to 22.1%, with EBITDA rising 11.9% QoQ. Kotak Equities expects an underlying EBIT margin improvement of 100 bps QoQ to 18.5%, even after factoring in a 70 bps impact from restructuring charges.
Brokerages broadly believe the December quarter could mark a turning point in margin trajectory, setting the stage for gradual recovery toward the 18–19% band over the medium term.
The relatively muted YoY PAT growth reflects the impact of restructuring costs, wage hikes and investments, even as operating leverage improves. Sequential improvement in profitability is expected to be stronger than headline YoY numbers suggest.
Management commentary on deal pipeline strength, conversion timelines, and profitability of cost take-out and vendor consolidation deals will be closely watched.
Kotak Equities expects management to provide greater clarity on recent investments in ER&D services and products, and how these bets could support growth acceleration into high single digits over the medium term.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Curated by Ahmed Ibrahim
