HCL Technologies’ Q1 FY25 Financial Results Preview

HCL Technologies, one of India’s largest IT companies, is set to announce its Q1FY25 results soon. According to average estimates from brokerages, the net profit is projected to be around Rs.3,745 crore. Revenue for the quarter is expected to be approximately Rs.27,997 crore, reflecting a 6.5% growth compared to Q1FY24.

Comparison with Previous Quarters

While there is an anticipated y-o-y growth in profit after tax (PAT), a sequential decline of 5.2% is expected, with PAT projected to decrease from Rs.3,985 crore in the previous quarter to Rs.3,776 crore. The IT and business services segment may see a negative impact on a q-o-q  basis due to project completions and reduced discretionary spending.

EBIT Margins & Deals

Analysts forecast a 70 bps q-o-q  decline and a 10 bps y-o-y decrease in EBIT margins. Despite a negative performance in net new deals in FY24, except for a major  $2.1 billion deal with Verizon, HCL Tech is expected to secure deals amounting to $2.5 billion. As per the reports, the company is likely to maintain its FY25 guidance of 3-5% revenue growth and 18-19% EBIT margins.

Segment Outlook

Analysts predict that HCL Tech will uphold its FY25 guidance, despite a projected 1% impact on Q2 results due to the divestiture of the State Street JV. The company may report a revenue increase of 6-7% y-o-y, ranging between Rs.27,900 crore to Rs.28,034 crore. However, sequential revenues could dip by 1-2%. The expected net profit for Q1FY25 is between Rs 3,714 crore and Rs 3,770 crore, up 5-7% year-on-year.

Industry Context

HCL Tech’s performance is set against a backdrop where Tata Consultancy Services (TCS) has also reported earnings, with a keen focus on segments such as BFSI, Retail, Telecom, and Technology. Analysts and investors are set to closely watch HCL Tech’s commentary on discretionary spending, updates on Gen AI projects, and overall recovery in different verticals.

Conclusion:In conclusion, HCL Technologies is anticipated to show a 6% y-o-y increase in net profit for Q1 FY25, aligning with average estimates. While facing potential declines in profitability, the company is focused on its deals and segment-specific performance.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.