HCL Tech to come out with its Q3 results on Friday

With stellar set of numbers coming from information technology (IT) majors TCS, Infosys and Wipro, all eyes are now set on HCL Technologies which will post its October-December 2020 quarter (Q3FY21) earnings tomorrow ( January 15).

Most analysts see a 5-6 per cent year-on-year (YoY) rise in Q3 revenue, led by broad-based growth across verticals and geographies and easing of stress in the ER&D segment. Sequentially, the revenue may rise between 2 and 3.5 per cent. The revenue could increase by 3 per cent quarter-on-quarter (QoQ) in constant currency (cc) terms and 2.5-4 per cent QoQ in dollar terms, believe analysts.

Outlook on ER&D business, deal total contract value (TCVs) and pipeline, recent acquisitions, margin trajectory given pricing pressure, capital allocation policies including payout ratios and M&A activities are among key monitorables. Besides, investors must also watch out for any revision in FY21 revenue and margin guidance and vertical wise commentary.

According to Emkay Global Financial Services, HCL Tech could revise its revenue guidance for FY21 upward to 2.5 per cent-3.5 per cent, factoring in DWS acquisition.

Strong growth in cloud adoption, improvement in mode 2 revenues and easing of stress in ER&D segment could drive the revenue of HCL Tech up by 6.1 per cent YoY and 3.5 per cent QoQ to Rs 19,241.7 crore, said ICICI Direct. The firm had posted a revenue of Rs 18,135 crore in the same quarter last year and Rs 18,594 crore in the preceding quarter.

Meannwhile it is said that HCL Tech's profit after tax (PAT) could rise between 2 and 5.5 per cent YoY but could come down or stay flat sequentially.

Sharekhan expects the company to maintain its margin guidance of 20 per cent-21 per cent for FY21.

At the bourses, shares of HCL Tech have risen 16.57 per cent in the three months that ended in December 2020 as against a 21.55 per cent rise in Nifty IT index and 24.30 per cent gains in benchmark Nifty50. Meanwhile, on a year-to-date basis, the stock is up 12 per cent till January 13, 2021.