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Informist, Thursday, Jul. 10, 2025

 

By Rajesh Gajra

 

NEW DELHI - HCL Technologies Ltd. will likely report sequentially flat revenue growth and a decline in net profit, along with a contraction in the earnings before interest and tax margin, for the June quarter. The company's sales are expected to have been hit by de-growth in sales of two key segments--services and products. Seasonality factor would also likely weigh on the company's revenue performance during the first quarter of the current financial year.

 

Analysts see the operating margin contracting in the June quarter mainly on account of weakness in the products segment which the company operates under the brand 'HCLSoftware'. This segment is typically a high-margin one for the company. The bottom line will likely track the revenue and operating profit performance.

 

HCL Technologies will detail its June quarter earnings on Monday. It is seen reporting a consolidated net profit of INR 42.35 billion for the June quarter, down 1.7% sequentially and 0.5% on a year-on-year basis, according to an average of estimates by 14 brokerage firms. The revenue from operations is seen inching up 0.3% on quarter and increasing 8.1% on year to INR 303.28 billion.

 

The highest net profit estimate of INR 44.49 billion is by brokerage Dolat Capital Market while the lowest estimate of INR 40.52 billion is by ICICI Securities. The revenue estimates range from a low of INR 300.78 billion by HSBC Global Research to a high of INR 307.38 billion by Nirmal Bang Equities.

 

In constant currency terms, HCL Tech's reporting quarter revenue, according to an average of estimates by nine brokerages, will likely be $3.54 billion, nearly flat as compared to $3.50 billion in the previous quarter. The earnings before interest and tax margin will likely be 17.3%, down from 18% in the previous quarter, according to an average of estimates by eight brokerage firms.

 

Kotak Institutional Equities expects the revenue in constant currency terms to decline 0.8% on quarter "due to seasonal weakness in IT services business", led by a fall of 0.8?ch in the services and products segments. The June quarter is a seasonally weak one for HCL Tech, brokerage firm Motilal Oswal Financial Services said in its preview note.

 

The brokerage expects the company to report a sequential decline of 1.2% in revenue in constant currency terms, amid a 1.2% expected drop in services segment and 1?cline in the products and platforms segment. These two brokerages, along with Elara Securities (India), expect HCL Tech to retain the 2025-26 (Apr-Mar) revenue guidance of 2-5%.

 

The banking, financial services, and insurance vertical, and the hi-tech segment, will likely have performed "relatively better", Motilal Oswal Financial said. "Manufacturing remains under pressure, particularly in auto, though signs of bottoming out are visible," the brokerage said in its preview note.

 

According to Kotak Equities, the EBIT margin of HCL Tech in the June quarter "will likely decline 60 bps qoq (quarter on quarter), in sync with decline in services business and the usual productivity pass resets." The EBIT margin contraction is estimated to be higher at 90 basis points sequentially by Elara "due to weak revenue, especially in its services part."

 

After the company releases its June quarter financial results, the investor focus is expected to be on issues such as impact of reciprocal tariff imposed by the US on directly impacted segments of manufacturing and retail, Kotak said in its preview note. The brokerage also expects investors to focus on the nature of deals in the pipeline and likely closure timeframe, as well as state of discretionary spending among clients.

 

HCL Tech has 16 buy recommendations from analysts at an average target price of INR 1,792, three hold recommendations at an average target price of INR 1,798, and two sell calls at an average target price of INR 1,620.

 

At 1110 IST, shares of HCL Tech were down 0.9% to INR 1,659 on the National Stock Exchange. The company's shares have risen around 12% since the closing price of INR 1,482 on Apr. 21, a day prior to the announcement of June quarter earnings on Apr. 22.

 

Following are the June quarter consolidated earnings estimates for HCL Technologies based on reports from 14 brokerage firms in descending order of estimate of net profit:

 

Broker	Net Sales	Net Profit	Revenue (mln $)	?IT margin
Dolat Capital Market Pvt Ltd	306,643	44,486	--	--
HDFC Securities Ltd	303,470	43,510	3,545	17.6
Emkay Global Financial Services Ltd	303,490	43,238	--	--
Nuvama Wealth Management Ltd	302,186	43,123	3,530	17.7
Motilal Oswal Financial Services Ltd	301,000	43,000	--	--
Nirmal Bang Equities Pvt Ltd	307,378	42,888	3,515	17.4
Sharekhan Ltd	303,320	42,690	--	--
Kotak Institutional Equities	303,536	42,110	3,546	17.3
Prabhudas Lilladher Pvt Ltd	303,700	41,900	3,547	17.3
Elara Securities (India) Pvt Ltd	302,449	41,541	3,533
HSBC Global Research	300,783	41,344	3,515	17.1
Anand Rathi Share and Stock Brokers Ltd	303,100	41,292	3,546	17
Antique Stock Broking Ltd	302,348	41,272	--	--
ICICI Securities Ltd	302,557	40,522	3,542	17
Average	303,283	42,351	3,535	17.3

 

 

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Vandana Hingorani

 

 

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