HCL Tech Share Price Ahead Of Q2: Tech Giant Hits New 52-Week High; What To Expect In Second Quarter Of FY25?

Tech giant, HCL Technologies, share price opened higher on Monday, October 14, to hit a new 52-week high of Rs 1,857.85 apiece. This comes ahead of the company's Q2 results announcement for FY25. In the second quarter, the company's IT services are expected to grow, owing to a revival in demand for BFSI. Margins are also likely to expand, while HCL Tech is expected to retain its FY25 guidance.

At the time of writing, HCL Tech was marginally up to Rs 1842 apiece on BSE. The company's market cap is around Rs 4,99,775.70 crore. In the early trade, the stock touched a new 52-week high of Rs 1857.85 apiece. The price-to-equity ratio of HCL is at 43.19x, while return on equity is at 29.28%.

HCL will announce the Second Quarter FY 2025 Results, which ended September 30, 2024, on Monday, October 14, 2024, post-closing of Indian stock markets. Following the results announcement, senior management of HCL Technologies will conduct an audio conference call at 7:30 p.m. (IST) for 60 minutes to discuss the results followed by a detailed question-answer session, as per the filing.

HCL Technologies Q2 Preview:

Brokerage Phillip Capital is expecting HCL Tech's CC revenue to grow by 0.5% qoq in CC. Further, it expects IT Services to grow by 1.3% QoQ in USD on BFSI demand revival offset by State Street divestiture (0.8% impact), ER&D to grow at +1.5% qoq in USD while Software growth likely to be muted at 1.0% QoQ in USD.

Also, Phillip Capital believes HCL Tech's margins could expand +90bps qoq due to the absence of productivity passbacks last quarter and operational efficiencies. While FY25 guidance is expected to be retained at f 3-5% yoy in CC growth along with EBIT Margins at 18-19% range.

Key things to watch out for would be FY25 Guidance, Outlook on ERD/Products business, deal TCVs & pipeline, discretionary spending outlook, and attrition in the earnings.

Further, Sharekhan in its preview note said, "HCL Tech is expected to report revenue growth of 0.6% in CC terms q-o-q with ~90 bps cross-currency tailwinds, leading to 1.5% q-o-q reported growth aided by recovery in BFSI but offset by State Street divesture impact. EBIT margin is expected to expand by ~80 bps q-o-q owing to operational efficiencies."

HDFC Securities also expects HCL Tech to maintain its 3-5% guidance despite State Street's dent in Q2 and high growth expectations in Q3. Also, HCL Tech's margin guidance (18-19%) is likely to be unchanged.

Meanwhile, JM Financial estimated 50 bps cross currency tailwind for HCL, and has built c.90bps impact due to State Street divestiture. Further, it built 1.5%/2.0%/-1.0% QoQ growth in IT Services/ERS/ Product & Platform business in USD terms. The brokerage expects 70bps EBIT margin expansion aided by favourable currency and operational improvement. JM has not assumed a wage hike in 2Q.

In Q1FY25, the company posted a consolidated net profit of Rs 4,257 crore in Q1FY25, registering a growth of 6.8% QoQ and 20.5% YoY. Consolidated revenue from operations stood at Rs 28,057 crore, down by 1.6% QoQ but up by 6.7% YoY. While constant currency revenue also dipped 1.6% QoQ but surged 5.6% YoY.