HCL Technologies: HCL Tech Q2 results preview: Profit likely to rise up to 16%; revenue guidance may remain unchanged

HCL Technologies is likely to report up to 16 per cent profit growth for the September quarter on Friday, led by strong deal wins. However, analysts expect the firm to keep its revenue guidance unchanged for FY21.

Brokerage firm Sharekhan expects the IT major to post a 16.30 per cent year-on-year (YoY) and 5.50 per cent quarter-on-quarter (QoQ) growth in net profit. On the other hand, it expects a 5.60 per cent YoY and 3.80 per cent QoQ rise in sales during the quarter.

The brokerage believes that HCL Tech may retain its revenue growth guidance of 1.5-2.5 per cent QoQ for Q3 and Q4 of FY21.

In general, market participants should zero in on FY21 revenue and margin guidance, deals win, outlook for the second half across all verticals, commentary on deal pipeline and pricing, commentary on products business, updates on any structural change in delivery model and commentary on capital allocation.

An assessment by IDBI Capital Markets shows that the company may post a 13.60 per cent YoY growth in net profit on 5.4 per cent rise in revenue.

The brokerage also expects EBIT margin of the company to improve by around 30 basis points QoQ as strong revenue growth and operational efficiencies are likely to offset the impact of rupee appreciation.

Earlier, the BSE IT index (up 31 per cent) has significantly outperformed the benchmark BSE Sensex (up 9 per cent) during the second quarter of FY21. Amid the pandemic, the IT sector has seen a good pick-up in demand for digital solutions resulting in improvement in the growth outlook for most of the companies within the sector.

This has reiterated sector’s ability to deal with headwinds which coupled with strong free cash flow (FCF) profile and corporate governance has resulted in re-rating of the sector.

Antique Stock Broking sees a 14 per cent YoY and 3.50 per cent QoQ growth in bottom line, while it sees a 6 per cent YoY and 4.1 per cent QoQ growth in top line figures.

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