HCL Tech Q4 Results, Dividend: EBIT Margins May Drop; Deal Wins, FY25 Guidance To Be Watched

Tech giant, HCL Technologies will be in focus on Thursday ahead of their Q4 report along with final dividend recommendation for FY24, later in the day. HCL's peers Infosys, Wipro, and TCS have declared their quarterly performances. In Q4FY24, HCL is expected to deliver stable constant currency growth, however, margins are likely to drop owing to moderation in the P&P business. The company's deal wins will be watched along with management commentary and FY25 guidance.

Ahead of its earnings, HCL's share price ended at Rs 1479.65 apiece, down by 0.5% on BSE with a market cap of Rs 4,01,527.46 crore. The stock's 52-week high and low are at Rs 1,696.50 and Rs 1,045 apiece respectively.

HCL in its third quarter of FY24, reported a consolidated net profit of Rs 4,350 crore, registering a growth of 13.51% from a net profit of Rs 3,832 crore in Q2FY24 and also up by 6.20% from Rs 4,096 crore in Q3FY23.

Meanwhile, in Q3FY24, the company's rupee revenue was at Rs 28,446 crore on a consolidated basis, rising by 6.65% QoQ and 6.54% YoY. In dollar terms, revenue stood at $3,415 million, up by 5.9% QoQ and 5.3% YoY. Also, constant currency revenue growth was at 6% QoQ and 4.3% YoY.

HCL Tech Q4 Results Preview:

Axis Securities On HCL Tech:

We expect HCL Tech to report revenue growth of 0.6% QoQ in rupee terms while delivering an operating margin contraction of 39bps. Key factors to watch out for are a) Deal TCV/deal pipeline, b) Pricing scenario, and c) Outlook on growth, operating margins and P&P business.

Nirmal Bang On HCL Tech:

We expect HCLT to hold out revenue growth guidance for FY25 of 4-7% in CC terms. We expect margin guidance to be similar to FY24 (18-19% EBIT).

We are expecting 0.5% CC growth QoQ in 4QFY24 after 6.0% CC growth QoQ in 3QFY24 on the back of Products & Platforms seasonality and ASAP acquisition.

After a weak 1HFY24, HCLT revised its CC growth guidance downward from 6-8% to 4-6% (5-6% including the ASAP acquisition) for FY24 and it further lowered the upper end of the guidance to 5-5.5% in 3QFY24 including inorganic growth.

We expect the EBIT margin to decline by 110bps QoQ to 18.6% as the higher margin P&P business will moderate as 3Q is seasonally the best quarter for this business.

After recording the highest-ever TCV number of US$3.97bn in 2QFY24, TCV for 3QFY24 moderated to US$1.93bn and came in at the lower end of the earlier guidance range of US$2-2.5bn. For 4QFY24, we expect TCV to come in the guided range on the back of a healthy pipeline.

Dolat Capital On HCL Tech:

Expect growth of 1.3% in CC terms QoQ led by contribution from Verizon deal and strong ER&D biz. OPM to decline by 54bps due to wage hike impact. Key Monitorable: 1) Improvement in large deal-wins data if any, 2) Expect FY25 guidance (Rev. $: 5-7%, OPM: 18-19%) & 3) Outlook on discretionary spend & CY24 client budget.

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