More Stories

Informist, Friday, Oct. 10, 2025

 

By Anjana Therese Antony

 

MUMBAI – Despite the uncertain macroeconomic environment, HCL Technologies Ltd. is expected to post double-digit sequential growth in its bottom line for the September quarter, outperforming most large-cap technology companies. Its mid-single digit revenue growth is also likely to be better than most of its large peers due to new deal wins and deal ramp-ups in two verticals – banking, financial services, and insurance, and hi-tech, brokerages said in their pre-earnings reports.

 

The Noida-based company's earnings before interest and tax margin is also likely to improve from the previous quarter due to the depreciation of the Indian rupee, a higher share of revenue from its products, and growth in services business. The company is widely expected to retain its 2025-26 (Apr-Mar) guidance for revenue growth as well as EBIT margin. Many broking firms have upgraded their rating for the stock, citing reasonable valuation and the company's medium-term growth prospects. 

 

HCL Tech's consolidated net profit is expected to grow almost 12% on quarter, but just 1% on year to INR 42.88 billion, according to an average of estimates by 14 broking firms. This is better than the sequential fall of 11% and year-on-year fall of 10% in the bottom line during the June quarter. HDFC Securities has the highest bottom line estimate of INR 44.91 billion and Nomura Equity Research has the lowest projection of INR 41.36 billion.

 

The company's consolidated revenue is likely to rise 4% sequentially and almost 10% on year to INR 316.17 billion, as per the average of the estimates. The top line growth is also better than the 0.3% sequential growth and 8% on-year rise in the June quarter. YES Securities has the highest revenue estimate of INR 321.14 billion and Nuvama Wealth Management has the lowest projection of INR 313.96 billion.

 

India's third-largest IT player in terms of market capitalisation is scheduled to release its quarterly results on Monday. Its post-earnings virtual press conference is scheduled for 1800 IST and the investor call for 1930 IST. Investors are likely to closely watch the management's comments on spending by US clients on IT, the deal pipeline, US policies about visas and trade, and deal conversions.

 

HCL Tech's likely strong performance will come amid persistent uncertainty about US policies related to tariffs, visas, and trade, which have led to worries about the near-term financial performance of IT companies in India, which earn a major chunk from the world's largest economy. "In Q2 (Jul-Sept), the demand environment has been the same as that in Q1 for IT companies, with no material improvement," Elara Securities said in its research report.

 

GUIDANCE 
At least a dozen broking firms expect HCL Tech to retain its constant currency revenue growth guidance of 3-5% for 2025-26 (Apr-Mar). In July, the company had raised the lower end of this guidance from 2-5%. For the September quarter, the company's constant currency revenue is expected to grow around 2% sequentially, driven by mega-deal ramp-ups in engineering services, broking firms said.

 

Some broking firms expect the company's total contract value to be within the guided range of $2 billion-$2.5 billion after posting a lower number of $1.81 billion for the June quarter. This will be supported by closure of two large deals during the reporting quarter, some brokerages said.

 

These brokerages also expect the company to retain its FY26 EBIT margin guidance of 17-18%. HCL Tech had cut its margin guidance from 18-19% provided in April. For the quarter ended June, the consolidated EBIT margin was 16.3%, sharply lower than 18% in the March quarter due to lower employee utilisation.

 

For the September quarter, almost all broking firms expect the margin to grow sequentially, but the extent of growth varies significantly. The metric is expected to rise in the range of 20-150 basis points on quarter, with Nomura having the lowest growth estimate and YES Securities forecasting the highest quantum of rise. 

 

Seasonality, cross-currency impact and a weak rupee are expected to provide a sequential tailwind of 150 basis points to HCL Tech's EBIT margin, YES Securities said in its earnings preview report. The broking firm said it has also recognised $50 million of restructuring charges spread across three quarters. The company had announced a restructuring programme to optimise its facilities outside India and a "talent ramp-down," especially in geographies outside India. 

 

STOCK VALUATION
At least four broking firms have upgraded HCL Tech's stock to 'buy' or an equivalent rating due to its reasonable valuation, following a correction over the last three months. The stock is trading at almost 22 times the FY26 price-to-earnings and 19.4 times the FY27 PE, Emkay Global Financial Services said in its report. The broking firm remains positive on the company's medium-term growth prospects. Although near-term growth/margin concerns persist, they are adequately priced-in, it said. 

 

Shares of the company have fallen 8% since the release of its June quarter earnings on Jul. 14. At 1234 IST, the stock was trading at INR 1,488.40 on the National Stock Exchange, up 0.1%. Of the 21 research reports on the company available with Informist, 10 have a 'buy' or equivalent rating on the stock with an average target price of INR 1,827, 23% higher than the current market price. Eight brokerages have a 'hold' on the stock and the remaining three have a 'sell' or equivalent rating. 

 

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

 

Broking firm	Net profit (INR million)	Net sales (INR million)	Revenue (mln $)	EBIT margin (in %)
HDFC Securities Ltd	44,910	314,180	3,603	17.3
YES Securities (India) Ltd	44,090	321,137	--	--
IDBI Capital Market Services Ltd	43,907	314,067	3,598	16.88
Nirmal Bang Equities Pvt Ltd	43,212	314,649	3,576	17.5
JM Financial Institutional Securities Pvt Ltd	43,200	316,875	3,601	--
Motilal Oswal Financial Services Ltd	43,000	316,000	3,625	16.8
HSBC Global Research	42,925	318,815	3,616	17
Kotak Institutional Equities	42,900	316,552	3,614	17
Equirus Securities Pvt Ltd	42,774	318,125	3,606	16.9
Nuvama Wealth Management Ltd	42,754	313,963	3,605	17
Emkay Global Financial Services Ltd	41,909	315,992	3,603	--
Prabhudas Lilladher Pvt Ltd	41,800	315,300	3,616	16.6
Elara Securities (India) Pvt Ltd	41,524	315,668	3,616	--
Nomura Equity Research	41,358	315,111	3,610	16.5
Average	42,875.93	316,173.86	3,606.82	16.95

 

End

 

US$1 = INR 88.65

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

 

Edited by Nishant Maher

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.