HCLTech will become the third IT major to report March quarter earnings on Thursday, April 20. The street is not expecting the results to be any different from its peers TCS and Infosys.

The company's revenue in both US Dollar, and rupee terms is likely to remain flat sequentially, as per a CNBC-TV18 poll. However, other parameters, including operating margin, are likely to decline compared to the December quarter.

On a constant currency basis, HCLTech's revenue is expected to decline by 1-1.5 percent, compared to a 5 percent growth in the December quarter. This is likely to be due to seasonal softness in the products business. The said business contributed 14 percent to the overall topline in the December quarter.

Also Read: TCS CEO designate sees impact on some projects due to Credit Suisse-UBS merger

In comparison, while TCS managed to see positive constant currency growth at 0.6 percent, Infosys reported a 3.2 percent drop, its worst in at least a decade.

EBIT margin for the quarter may drop 120 basis points from the December quarter due to a decline in the product business mix. However, on a year-on-year basis, the margin may go up by 20 basis points.

HCLTech's December quarter was strong led by the software business, which grew over 30 percent sequentially in constant currency terms, while the core services business grew by 2.2 percent in constant currency. The key question here is whether the services business be better compared to its peers.

The Guidance Worries

After the guidance given by Infosys post its quarterly results, the street is on the edge as to what HCLTech would come up with for financial year 2024.

Consolidated revenue growth for the full year is seen between 5-7 percent in constant currency terms. Consensus expectations range between 4-8 percent. Growth for the services business is seen between 6-8 percent, while the consensus projections range between 5-9 percent. Analysts expect HCLTech to guide for EBIT margin to range between 18-20 percent for the year.

Also Read: TCS hopes to hit 26% margin soon as attrition continues to ease

The street will also be concerned over whether HCLTech is able to meet its full-year guidance for financial year 2023 after revising it lower earlier. Revenue guidance in constant currency terms was cut to 13.5-14 percent, from 13.5-14.5 percent earlier. The higher end of the EBIT margin guidance was also revised lower to 18-18.5 percent from 18-19 percent.

HCLTech won deals worth $2.3 billion during the December quarter with annual contract value rising 2 percent year-on-year. Of those, a billion dollars came from the top three deals. The company won 17 large dals during the quarter.

The management had noted that the deal pipeline has a healthy mix of cost takeout, vendor consolidation and transformation projects.

Shares of HCLTech remain 0.7 percent higher on a year-to-date basis. It is still outperforming both TCS and Infosys, who are down 5 percent and 18 percent respectively so far this year.

First Published:Apr 19, 2023 12:44 PM IST