IT services giant HCLTech Ltd. is set to report its Q2 results on Monday, October 14, with investors closely watching how the company performs following a challenging June quarter. After a 1.6% revenue decline in constant currency terms in the previous quarter, HCLTech is expected to report 0.6% sequential revenue growth for Q2. The company had previously guided that the September quarter would see growth, but it is likely to face a 0.8% revenue headwind due to the insourcing of its joint venture with State Street.
While most verticals and geographies for HCLTech are expected to see growth this quarter, the financial services (BFS) segment may show signs of recovery only by the December quarter. Margins remain a key area of concern, as estimates suggest an improvement by 100 basis points on a sequential basis. However, margins have already dropped by 260 basis points over the past two quarters. To maintain its EBIT margin guidance of 18% to 19%, further margin recovery will be required.
Key Factors to Watch in HCLTech’s Results:
- The company is expected to maintain its constant currency revenue growth guidance of 3-5% and EBIT margin guidance of 18% to 19%.
- Deal wins are anticipated to reach $2.2 billion for the quarter, slightly lower year-on-year due to the base effect from the Verizon deal in the previous year.
- Recovery in discretionary spending in the services segment will be a key factor to monitor.
- The environment required for the company to achieve its aspirational EBIT margin band of 19% to 20%.
As of 10:00 am, HCLTech shares were trading 0.11% lower at ₹1,837.55 on the NSE, as investors await the Q2 results.
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