HCL Tech Q3 Results Live Updates: Company reports profit of ₹4,350 crore; revenue at ₹28,446 crore

HCL Tech Q3 Results Live: The company’s consolidated revenue came in at ₹28,446 crore in the third quarter of FY 23-24.

HCL Tech Q3 Results Live: The IT giant reported a net consolidated profit (attributable to shareholders) of ₹4,350 crore in the Oct-Dec quarter.

HCL Tech Q3 Results Live: In last one year, the HCL Tech’s share value has increased by 43.95% in last one year. The company stock touched its 52-week-high mark of ₹1,554.75 per share on BSE on Friday.

HCL Tech Q3 Results Live: Generally, December month is a seasonally strong quarter for the company. That’s why there are chances that HCL Tech will witness a “4.3 percent QoQ growth led by $50 million incremental revenues from Verizon contract, contribution of 1.5 percent to growth,” according to a report by Kotak Institutional Equities. 

The report also highlighted that the company will earn $30 million incremental revenues from ASAP acquisition, driving 1 percent incremental contribution; and $70 million incremental revenues from products business (2.3 percent contribution) from seasonal strength in products.

HCL Tech Q3 Results Live: HCL Technologies is expected to make a 5.47% sequential uptick in earnings before interest and taxes (EBIT) to ₹5,204 crore, with an expected improvement of 13 basis points in the EBIT margin.

HCL Tech Q3 Results Live: According to the market experts expectations, the company is expected to present a growth of 6.3% in net profit reaching ₹4,063 crore, driven by robust revenue expansion.

HCL Tech Q3 Results Live: Market experts are of the view that HCL Tech would be able to achieve better than its peers quarterly results with the help of strong growth in its Services business (buoyed by Verizon deal) and favorable seasonality for its Products business.

HCL Tech Q3 Results Live: HCL Tech stock closed on a strong note ahead of the announcement of its company results. The IT major’s stock closed 3.85% higher at ₹1543 per share on BSE on Friday. Its market capitalisation stood at ₹4,18,718.52 crore.

HCL Tech Q3 Results Live: HCL Tech to achieve its margin guidance of 18-19%, according to Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services. 

“With a strong margin outperformance, HCLT remains confident of achieving its margin guidance of 18-19%. Higher exposure to Cloud, which comprises a larger share of non-discretionary spending, offers better resilience to its portfolio in the current context amid higher demand for Cloud, Network, Security, and Digital workplace services,” Khemka said.

HCL Tech Q3 Results Live: The company reported a net profit of ₹2,966 crore in July-Sept quarter. Whereas, the consolidated net revenue earned during the second quarter of current financial year was ₹12,059 crore.

HCL Tech Q3 Results Live: Despite expectations of a muted IT results in the third quarter, HCL Tech is likely to outshine its peers with an estimated 4.8% QoQ CC growth. 

“Among tier I, expect HCL Tech (HCLT IN) to outshine with an estimated 4.8% QoQ CC growth, led by both Services business (buoyed by Verizon deal) and favorable seasonality for its Products business,” Elara Capital said in a report.

The company announced in an exchange filing that the board of directors will meet on January 12, 2024, to discuss a number of matters, including the payment of the fourth interim dividend for the fiscal year 2023–2024 and the unaudited financial results of the company for the quarter and nine months ending December 31, 2023.

“The record date for determining the entitlement of shareholders for payment of the aforesaid interim dividend shall be January 20, 2024, subject to the approval of the interim dividend by the board,” said the company.

“The Company will announce the Third Quarter FY 2024 Results, ended December 31, 2023, on Friday, January 12, 2024, post-closing of Indian stock markets.

Following the results announcement, senior management of HCL Technologies will conduct audio conference call at 7:30 p.m. (IST) for 60 minutes to discuss the results followed by the detailed question-answer session,” the company said in a filing.

Click to register. 

The brokerage claims that higher-than-expected furloughs in 3QFY24 caused the weakness in the demand for IT services. Seasonality will probably have a negative impact on both tier-1 and tier-2 IT companies’ revenue growth and margin performances. Discretionary spending continues to pause across enterprises, and the industry has not seen any significant changes in spending patterns. Though sentiment has improved, actions have not yet followed suit.

“We expect weak 3Q earnings from higher-than-expected furloughs to lower expectations for FY24 and drive a slow start to FY25. This keeps us tactically cautious on the sector,” said JP Morgan in its report.

Considering the seasonal strength of its IP business, HCL Tech is probably going to be at the top end. The majority of players would hold off on speaking till Q4. Commentary regarding CY24 budgets may be tentative due to the ongoing budget exercise. Deal wins may decline from the record 2Q level, particularly for the top 3. On the other hand, it appears that a weak FY24 exit is coming. Coforge and HCL Tech should be closer to the lower end of their guidance, in the brokerage’s opinion.

According to the brokerage, EBIT margin trends are expected to be mixed, partly offset by moderating supply side pressure and currency tailwinds, and impacted by wage hikes (Infosys, Wipro, and HCL Tech among Tier1) along with muted revenue growth in a seasonally weak quarter. EBIT margin expansion (~25–100 bps) is anticipated for Tier 1 companies TCS, HCL Tech, and Tech Mahindra, and margin contraction (~70/95 bps) for Wipro and Infosys.

Despite outperforming peers in FY24E and matching peers in FY25E growth, the brokerage believes that once the demand cycle turns and discretionary tech spends return, it will lag behind peers in growth. This is because of its low exposure to the digital portfolio.

“HCL Tech’s  relatively high payout ratio can provide support to the stock in a falling interest rate environment, in our view. We believe the stock is fairly priced at 23.5x 1 yr fwd PE,” the brokerage said.

• Significant demand for Cloud Migration and Modernisation
• Gen AI getting mature from hereon 
• Stable atrition rates 
• Operational efficiencies and Inorganic acquisition driving margins

JM Financial anticipates 2.2%–5.3% QoQ cc growth across its large-cap coverage universe. Reduced working days, higher-than-normal furloughs, and a lack of budget flush will affect player growth. HCL Tech stands to gain from a two-month incremental contribution from the ASAP acquisition, a year-end increase in software sales (+26% QoQ), and the ramp-up of the Verizon deal.

The brokerage claims that management’s Q3 remarks will set the tone for growth expectations for FY25 and FY26. Investor attention will be focused on management’s remarks regarding CY24 budgets and any indications of improvement in client spending behaviour. While Infosys, HCL Tech, Coforge, and L&T Technology Services do not anticipate changes to their FY24 growth guidance, Cyient is expected to slightly lower its growth guidance.

With an estimated 4.8% QoQ CC growth, the brokerage expects HCL Tech to outperform, driven by both its Services business (bolstered by the Verizon deal) and its Products business’s favourable seasonality.

“We anticipate sequential revenue growth of 4.8% in CC terms. This is backed by solid demand in ER&D business and strong seasonal growth for HCLT’s product business (30% QoQ growth), which may drive revenue growth. We expect traction of 1.9% in the services business from Verizon deal. However, higher furloughs in Hi-Tech and BFSI could drag down growth,” the brokerage said.

The global brokerage firm raised its target price for HCL Tech from ₹1,070 to ₹1,520, upgrading it from UW to Neutral. Given that it was less exposed to the BFSI and Hitech headwinds than its peers and less exposed to digital discretionary tech spends, which have been hardest hit, the brokerage expects HCL Tech to grow as the fastest growing large cap company in FY24 on CC revenue growth.

Watch out for the following, according to brokerage firm BNP Paribas: performance of impacted verticals like ER&D, tech, and telecom; outlook for FY24 revenue and margins; risk of macro headwinds on demand and demand outlook; outlook for services and Products & Platforms segments; commentary on client budgets; investments in GenAI partnerships and solutions; timeline of large deal win ramp-ups and pipeline; update on the Verizon deal’s ramp-up and stake sale in Statestreet HCL Services.

According to the brokerage, at present, the Nifty IT Index is valued at a premium of 11.7%, with a P/Ex of 29.3 compared to its Mean P/Ex of 26.2. The demand environment in the third quarter has not changed. Nonetheless, the recent Fed remarks about potential rate reductions in CY24 have fueled a surge in the valuation of IT companies. There will be volatility through the first half of CY24, as major nations will be holding elections in that year.

“We see IT index slightly overvalued at this time and would focus more on company specific growth prospects,” the brokerage said.

According to Kapil Shah, Technical trainer at Finlearn Academy and Technical analyst at Emkay Global, Nifty IT has risen almost 5% post the result announcement. Nifty IT index is trading at 36,400 level and it got immediate resistance at 36,800 level. It is important to observe how Index behave around mentioned level. 

HCL Tech is one of the strongest stock in terms of price performance. Stock is in bullish continuation. Bulls will hold their fort as far as stock sustain above 1,400 level. Based on Fibonacci Extension, Stock can have upside potential upto 1,650 and 1,740 level.

Brokerage Motilal Oswal predicts that weak macros, furloughs, and reductions in discretionary spending will dampen Tier-I companies’ revenues. In CC terms, Infosys/Wipro’s revenue should drop drastically by 1.7% to 2.7% QoQ. With +2.0% QoQ CC for its Service business, HCL Tech should outperform peers.

HCL Tech is anticipated to report sequential revenue growth at 4.4% in CC terms in a seasonally strong quarter, according to Sharekhan by BNP Paribas, helped by the ramp up of the Verizon deal and the contribution from ASAP Group. Operating efficiencies and higher revenues will help the EBIT margin to improve by about 50 basis points on a quarterly basis.

According to analysts, HCL Tech stock has been forming higher top higher bottom. The 20 DEMA support is placed around Rs. 1450–1430, which will be seen as important support in the short term.

The Nifty IT index has formed a ‘Higher Top higher Bottom’ structure recently, which suggests an uptrend, according to Ruchit Jain, Lead Research Analyst at 5Paisa. Recently, strong volumes have supported price increases for a few index heavyweights that had underperformed the overall markets in the previous few quarters.

“Thus, it seems that downside should be limited for the index and hence, any dips in the IT stocks should be seen as buying opportunity for the medium term. The immediate support for the IT index is placed around 34,200 followed by 33,400. We expect the IT index to rally higher towards 36,500 in the near term,” said Jain.

HCL Tech share price hits 52-week high ahead of Q3 earnings. The Nifty IT has risen over 3% on Friday’s session following Infosys and TCS Q3 results, which were slightly better than the street’s estimates. 

The brokerage states that the management’s commentary regarding the new deal ramp-up and future visibility are important to pay attention to. This quarter, significant deal wins are anticipated.The management’s remarks regarding the new deal’s ramp-up and future visibility are important things to keep an eye out for.

HCL Tech’s revenue is expected to increase 4.2% QoQ in USD and 4.6% QoQ in CC, with services contributing 2.5% and P&P (20% QoQ due to seasonality) respectively. The $40–50 million Verizon deal (2 months) and the 2-month-old ASAP acquisition will propel the growth of services. EBIT margin will increase by 60 bps on a quarterly basis due to seasonal margin growth in P&P. 

“We anticipate that HCLT will stick to its guidance for FY24 revenue (4.5–5.5% CC YoY growth in services) and margin (18–19%),” the brokerage said.

HCL Technologies is one of the major winners from having a defensive business mix among Tier-I companies, which should promote growth in a situation where demand is constrained.

“We expect the company to maintain its revenue guidance and margins. Commentary on the ramp up of mega wins and the demand trends around ERD space would be the key monitorables,” the brokerage said.

“EBITA margins are also expected to improve owing to cost efficiencies, seasonal strength in the high-margin P&P business, and forex benefits,” said Dhruv Mudaraddi, Research Analyst at StoxBox.

“We expect Wipro’s Q3FY24 revenue to grow in the mid single digits QoQ driven by the Verizon deal ramp-up, the additional contribution from the ASAP Group acquisition for two months, and the seasonality benefits in Products and Platform (P&P) business,” said Dhruv Mudaraddi, Research Analyst at StoxBox.

“We believe that the company’s revenue is poised to rise by 5.25% on a QoQ basis, reaching ₹28,075 crore, showcasing steady growth from the previous ₹26,672 crore,” said Amit Goel, Co-Founder and Chief Global Strategist at Pace 360.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.