Brokerages expect dollar revenue growth in the range of 2.7 % to 3.3 % as compared to its previous quarter as deal momentum has been extremely strong after announcements of several mega deals
HCL Technologies company will announce results on May 9.
according, Brokerage's profit to decline marginally compared to the previous quarter, partly impacted by tepid operating income growth.
Prabhudas Lilladher expects net profit to fall by 2.9 % sequentially - 2,536.4 crore Rs while Motilal Oswal sees 1.2 % decline QoQ.
But revenue growth is likely to be higher than its closest squint TCS, Infosys, Wipro, and Tech Mahindra.
"We believe that HCL Tech should guide for revenue growth upwards of 15 %.
(1) improved organic growth,
(2) revenues from IBM’s IP purchases,
(3) recent mega-deal with Xerox, and
(4) the residual impact from acquisition integration in FY19," Motilal Oswal said.
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On guidance, Kotak expects the company to guide for 14-16 % revenue growth which includes an inorganic component of 5.4 % revenues from the IBM products buyout.
It expects HCL to guide to 8.5-10.5 % revenue growth excluding IBM products but including other inorganic components.
Brokerages say EBIT margin may contract sequentially due to rupee appreciation but could be within the guidance given by management.
"Operating margin is likely to be 19.7 %, in line with management guidance of 19.5–20.5 %. INR appreciation, partially offset by operational efficiencies, should erode EBITDA margin by 10bps," Sources said.
Kotak also expects EBIT margin to decline 10 bps due to rupee appreciation and elevated investments in the business
Key things to watch out for would be:
1) Overall guidance for FY20, organic and inorganic contribution
2) Mode 1: Demand for IMS services and growth in BFSI vertical
3) Mode 3: Plan to launch more HCL branded products and the ability to sell them in the market
4) Capital allocation in light of aggressive product acquisitions5) Deflationary impact from renewal of legacy IMS deals
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