HCL Tech Q3 Results Preview: Up to 20% YoY drop in profit likely; FY22 guidance may stay intact

NEW DELHI: HCL Technologies is likely to report a year-on-year (YoY) double-digit fall in December quarter profit despite a double-digit rise in sales. Analysts expect a sharp fall in Ebitda margins although, they said, the IT major will likely maintain its revenue (constant currency) and Ebit margin guidance for FY22.Axis Securities is anticipating a 19 per cent YoY drop in PAT at Rs 3,210 crore from Rs 3,982 crore in the same quarter last year. It pegs sales at Rs 21,658 crore, up 12.2 per cent YoY. Ebitda margin is seen contracting 374 basis points to 24.5 per cent in Q3FY22 from 28.2 per cent Q3FY21.Anand Rathi is estimating profit at Rs 3,439.40 crore, down 13.6 per cent YoY. It sees the sales figure at Rs 21,833 crore, up 11.3 per cent YoY. Margin is seen plunging 482 basis points YoY to 23.4 per cent.Sequentially, "We expect revenue to grow 4.9 per cent aided by strong deal wins. Margins will likely improve due to strong volume growth and strong executions. The management commentary on the new deal ramp up and visibility going ahead are key things to watch," Axis Securities said.Emkay Global is building in a 3 per cent sequential growth in dollar revenues after factoring in 80 basis points cross-currency headwinds. "The products and platforms segment is expected to report a sharp rebound sequentially, driven by seasonal strength. We expect EBIT margins to expand by 100 bps QoQ on the back of revenue growth, offshore shift and a rebound in products & platforms segment profitability negating the impact of salary hike and supply-side pressures," it said.Elara Securities, meanwhile, said that the new deal wins were valued at $3.9 billion for HCL Tech in H1FY22 and that it expects revenue and margin guidance to be retained at over 10 per cent and 19-21 per cent, respectively. "Headcount addition & commentary on the supply side, ERS growth and outlook & Mode-2 performance will be keenly followed," it said.IDBI Capital, which is expecting a 20 per cent YoY fall in profit for HCL Tech, said the company may still maintain double-digit growth guidance."Outlook on Engineering and R&D services and product business, commentary on the deal pipeline, pricing, capital allocation and M&A, in addition to the attrition trend will be watched," it said.

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