The results of the results take Steam with several large ticket results built during this week starting with HCL Technologies Ltd (HCL), which is scheduled to state the results on July 12 for the quarter ended June 2022.

Ranking among the four top IT companies in the country, experts hope that HCL Tech reports soft income growth during the quarter due to seasonal weaknesses and moderation in demand. The prevailing currency crossing forest also tends to play spoilsport in the growth of dollar revenue for the company.

According to a collection of brokerage reports that can be accessed by MoneyControl, IT products and service companies based in Noida are expected to report profits after tax (PAT) of 3,200-3,400 crores for reported quarters, register flat into the middle-single digits in year growth. In sequence, however, the profit is expected to swim around 6-10 percent.

Income for this quarter is likely to come at RS 23,400 Crore in growth in 16 percent, while sequential growth in income tends to be 3 percent simple.

The company has recorded a consolidated net profit of 3,215 crores during the appropriate period from the last financial year when it has registered the consolidated revenue of RS 20,068 Crore.

PAT from January to March 2021 was established in RS 3,593 Crore with a consolidated revenue of RS 22,597 Crore.

Currency income and constant dollars

Experts expect a simple sequential growth of 1-2 percent in the revenue of the corporate dollar while income in terms of constant currencies tends to grow in 2.5 percent compared to the previous quarter.

“The growth of Q1fy23 cc (constant currency) will be good because of the conversion of agreements in the seasonal service IT and P&P services (products and platforms) business while the core service business will see some moderations of growth, but must provide 2.5 percent growth of QoQ cc,” a report from the motilal brokerage company

Said Oswal Financial Services.

The Securities Box estimates that the growth of simple sequential revenue of 2.3 percent is led by a 2.4 percent CC growth in services (IT Services + Engineering and Research & Development (ERD). The box hopes that service growth will be powered by a sustainable force in the victory of the agreement while the product business will likely remain flat at $ 306 million in revenue.

Margin

Round sound brokers expect the company to receive margin due to higher retention costs, increase travel costs and visas and higher sub-contractor costs. EBIT margin (income before interest and tax) is expected to decrease by 40-50 bps in the quarter. However, when compared to the period of last year, the decline was far clearer in almost 200 bps. EBIT margin for the company during the current quarter is most likely 17.5 percent.

Dealing with TCV and guidance

The company is likely to continue to witness the strong attraction in the new TCV agreement (total contract value) during the quarter. “We estimate the growth of TCV from a new clean offer above $ 2 billion from $ 1.7 billion in the June 2021 quarter”, a report from the Institutional Equities box said.

Analysts hope that the company will maintain a 12-14 percent revenue growth guide and an ebit margin of 18-20 percent. However, the focus will be on the EBIT margin guide noteing the deduction of the 19-21 percent guide given to FY2022 based on where there is a possibility that the company can revise its margin guide down in the future quarter.

Main focus area

Experts believe that the product and platform business will be a field of focus that records disappointment for the last few quarters.

The Institutional Equities box hopes that investors focus on claws behind the margin recording advanced slip during the last few quarters and large agreement activities in the market, especially noting higher company dependence on large transactions for growth.

Leverage price, if any, cancellation/delay of the program due to macro uncertainty, high inflation and supply chain disorders. Prospect demand for the main vertical such as BFSI, manufacturing, and health care will be other main areas that must be considered together with the friction rate.

HCL Technologies was traded in RS 952.2 on July 11 at 1.30 pm, down RS 31.8 or 3.2 percent from the previous closure. Stocks have fallen 3 percent over the past year and have lost 6 percent over the past month.

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