HCL Tech Q2 results preview: Single-digit growth in revenue and net profit expected; check key details

Investors are awaiting HCL Tech’s financial numbers after India’s largest IT services provider, TCS, posted weaker-than-expected numbers for the September quarter.

HCL Tech likely to post single-digit growth in Q2 revenue

Experts believe that HCL Tech is likely to report a single-digit growth in its September quarter revenue following lower contributions from the BFSI segment. Also, below-par growth in the software business and lower revenue from key clients like State Street due to divestment likely to impact Q2 revenue.

HCL Tech may post revenue growth of 7.1%-9.2% YoY for the second quarter of FY 2024-25. The company may report revenue in the range of ₹26,650 crore to ₹28,710 crore in the quarter under review. According to investing.com, Q2 revenue is expected at ₹28,569 crore.

Better performance from the services sector segment is likely to compensate for the products business’s underperformance in the second quarter, according to experts. Except for BFSI, the company may post broad-based growth across verticals and geographies.

Net profit growth likely to grow 5 to 6%; EBIT may go up

HCL Tech is likely to post a net profit between ₹3,832 crore and ₹4,097 crore in the September quarter. Profit growth is likely to range between 5-6%, according to experts.

The IT company may post earnings before interest and taxes at ₹4,934 crore for the September quarter, a growth rate of 3.1% to 3.9% year-on-year and 6% to 6.9% quarter-on-quarter.

HCL Tech reported decent growth in June quarter

HCL Technologies posted decent growth in the June quarter as its net profit jumped 20.46% year-on-year to ₹4,257 crore compared to ₹3,534 crore in the first quarter of FY24.

Revenue from operations rose by 6.70% YoY to ₹28,057 crore in the June quarter compared to ₹26,296 crore in the year-ago quarter.

The company reported new deal wins of $1.96 billion, up from $1.56 billion in the year-ago period. The deals included a five-year deal with SBI and German Bank apoBank extending its contract for $278 million over seven and a half years.

The company sounded bullish, with its CEO, C Vijayakumar, saying that he was confident of decent growth in the coming quarters.

Total contract value may take a hit

According to experts, total contract value (TCV) may take a hit sequentially in the September quarter. The new deal TCV has been weak over the past few quarters, and investors will be keeping an eye on these numbers.

The company is also expected to maintain its guidance of 3-5% revenue growth and 18-19% EBIT margin for FY25.

In addition to this, investors will also await management commentary on discretionary spending in the services segment and the environment required to achieve EBIT margins of 19-20%. HCL Tech's attrition level, hiring plans, and spending on training and infrastructure will also be the focus.