Q3FY24 Preview: HCL Technologies: Revenues seen at Rs. 281,787 million, PAT at Rs. 41,937 million

11 Jan 2024 , 09:19 AM

Result date: January 12, 2023

Recommendation: Add

Target price: Rs. 1,400    

HCL Technologies’ revenues could grow by 5.8% cc sequentially (+4.9% cc sequential growth organically) in the December quarter, on Verizon deal ramp up, 2 months’ additional contribution from ASAP Group acquisition and Products and Platform (P&P) seasonality.

Analysts at IIFL Capital Services expect the company’s margins to expand 60 basis points sequentially, as impact of wage hikes, large deal ramp up costs is offset by P&P seasonality and productivity benefits. They expect the company to maintain FY24 revenue growth guidance at 5-6% cc YoY and EBIT margin guidance at 18-19%. 

The company’s Profit After Tax or PAT could grow 9.4% sequentially.

Important management insights to watch out for:

• Update on demand environment
• Progress on Verizon deal ramp up 
• Deal win TCV and nature of deals
• Margins puts and takes
• Capital allocation

	December 2023 estimates	QoQ change	YoY change
Revenue (US$ mn)	3,395	5.3%	4.7%
Revenue (Rs. mn)	281,787	5.6%	5.5%
EBIT (Rs. mn)	53,729	8.9%	2.8%
EBIT margin	19.1%	60 bps	(50) bps
Profit After Tax (Rs. mn)	41,937	9.4%	3.4%
EPS (Rs.)	15.5	9.4%	3.3%

Source: IIFL Research