HCL Tech Q1 results preview: Five things to watch out for in the earnings tomorrow

livemint.com:

HCL Technologies is expected to report a soft set of numbers for the April-June quarter of the current financial year (Q1FY24), mostly because of the slowdown in the demand environment and the impact of cancellations in ER&D (engineering research and development). The company's revenue may see a rise on a yearly basis but it may remain either flat or negative sequentially but margins may remain stable. Apart from the numbers, brokerage firms said that management commentary on the near-term demand environment and ER&D will be the key monitorable.

As per the estimates of Kotak Institutional Equities, HCL Tech's adjusted PAT may rise 18.2 per cent YoY and revenue may see a rise of 14.9 per cent YoY. "Our forecast of one per cent organic constant currency (CC) revenue growth rate is based on—(1) 3 per cent QoQ (quarter-on-quarter) growth in IT services courtesy of ramp-up in mega-deals, (2) 2.5 per cent QoQ revenue decline in engineering research and development and (3) 4.1 QoQ decline in the products segment," said Kotak. The brokerage firm pointed out that the engineering research and development segment will have to bear the full quarter impact of programs that came to an end or were cancelled.

Discretionary spending in IT has slowed, although offset by mega-deal ramp-up. EBIT margin will remain stable QoQ. Pressure from large deal ramp-up will be offset by operational improvements, Kotak said.