HCL Technologies share price in focus ahead of Q1 results; check details

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HCL Technologies shares traded choppy on Wednesday's trading session ahead of the company's Q1FY23 (April-June) quarter results. Analysts anticipate that the company would report weak financial results for the April–June quarter of the current fiscal year (Q1FY24), mostly as a result of a downturn in the market environment and the impact of cancelled ER&D (engineering research and development) projects. HCL Tech share opened at ₹1,117.05 apiece on BSE.

Although the company's revenue may increase annually, sequentially it may remain constant or even decline, but margins may stay stable. Kotak Institutional Equities forecasts that HCL Tech's adjusted PAT will increase by 18.2% YoY and that its revenue will increase by 14.9% 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.

Although compensated by a ramp-up in mega-deals, discretionary IT spending has decreased. QoQ, EBIT margin will be constant. Improvements to operations will lessen the impact of the ramp-up of huge deals, according to Kotak.

The brokerage firm anticipates that HCL Tech would adhere to its FY2024 revenue growth and EBIT margin targets of 6–8% and 18%, respectively. Brokerage firm stated that in addition to the numbers, management commentary on the near-term demand situation and ER&D will be the most important monitorable. On the technical front, as per trendlyne data, the stock price rose 17.9% and outperformed its sector by 8.4% in the past year.