With major IT services firms like Tata Consultancy Services (TCS), Infosys, Wipro already having released its fiscal fourth quarter, another tech giant HCL Tech is slated to announce its Q4 numbers on April 22 (Tuesday). Brokerage firms and analysts said that the IT firm is expected to follow suit in line with muted sequential top and bottom-line growth as posted by the other three aforementioned companies. This is mainly due to seasonal weakness in the products business and margin pressures. According to brokerages, HCL Tech is expected to post Q4 revenue at around Rs 30,000 crore and profit for the quarter in review is estimated at Rs 4300 crore. Additionally, per an average estimate of six brokerages, revenue from operations during the fourth quarter is expected to rise by 5 per cent YoY and net profit for the same profit is seen growing by 8 per cent on-year.
Kotak Institutional Equities, “We forecast c/c revenue decline of 0.7 per cent due to seasonal weakness in the products business. We forecast 0.9 per cent growth in services business and (-)0.1 per cent on organic basis. Revenues include 90 bps contribution from CTG acquisition. We forecast EBIT margin of 18.2 per cent, an increase of 60 bps YoY and decline of 140 bps QoQ. We forecast TCV of net new deals at $2.2 billion, similar to earlier quarters.”
Earlier on April 16, HCL Tech had announced that the IT major will release its Q4 earnings report on April 22. Further, the management team will address a post earnings press conference on the same date at 7:30 pm. In a regulatory filing, it had said, “The company will announce the Fourth Quarter and Annual FY 2025 Results, ended March 31, 2025, on Tuesday, April 22, 2025, post-closing of Indian stock markets. Following the results announcement, senior management of HCL Technologies will conduct audio conference call at 7:30 p.m. (IST) for 60 minutes to discuss the results followed by the detailed question-answer session.”
Expectations on FY26 guidance
HCL Tech is expected to guide for revenue growth of 3- 5 per cent for FY26, including a 100 bps contribution from the CTG acquisition, said Kotak Institutional Equities. This implies a compounded quarterly growth rate (CQGR) of 0.5- 1.3 per cent for the fiscal year. The EBIT margin guidance is likely to remain unchanged in the range of 18-19 per cent, it added.
JM Financial said, “HCL could guide 3-5 per cent too, but aided by 1ppt in-organic contribution. The key questions investors need answer to is whether the current uncertainty will defer or derail the recovery.”
Brokerage views on HDFC Bank’s Q4 results
HCL Tech is projected to post a 1.6 per cent sequential increase in revenue to Rs 30,356 crore in Q4FY25. However, in dollar terms, revenue is estimated to decline 0.8 per cent QoQ to $3,505 million. Kotak estimated a 0.7 per cent decline in constant currency (CC) revenue, citing seasonal weakness in the products business, planned scale-downs of mega-deals, and tapering of telecom contracts. Services revenue is expected to grow 0.9 per cent QoQ (0.1 per cent on an organic basis), with approximately 90 basis points of revenue contribution from the CTG acquisition.
InCred Equities said, “Services business could grow 1 per cent CC (led by CTG acquisition contribution) and flattish on an organic basis.” Overall revenue weakness, it added, will be driven by weak Product business seasonality. In terms of EBIT margin, weak product business seasonality is expected to offset INR depreciation tailwinds.
JM Financial said, “HCL Tech’s margin will be weighed down by lower software sales and partial wage hike. We estimate 22 bps cross currency headwind for HCL Tech. We are building -0.75%/5.1%/-14% QoQ growth in IT Services/ERS/ Product & Platform business in USD terms. We have built $50 million contribution from CTG (part of ERS), which implies an incremental contribution of $32 million (90bps QoQ). Expect 120bps EBIT margin decline led by lower contribution of Software sales.”
An analysis report by Sharekhan stated, “HCL Tech is expected to report a sequential revenue growth of -0.7 per cent in CC terms due to weak seasonality of its product business. EBIT margin is expected to decline by around 110 bps QoQ impacted by residual wage hike and product business seasonality.”
ICICI Securities said, “Revenue headwinds in Q4 include 1) large project completion in retail and CPG vertical; 2) planned reduction in mega-deal driven work in telecom; 3) delay in ramp up of discretionary deals and 4) weak seasonality in products business.” It further added that Q4 will include a 2-month contribution from HPE acquisition of around $40 million. The brokerage firm said, “Revenue headwinds in Q4 include, 1) large project completion in retail and CPG vertical; 2) planned reduction in mega-deal driven work in telecom; 3) delay in ramp up of discretionary deals; and 4) weak seasonality in products business.”
Estimates from brokerage firms
InCred Equities
Revenue
Rs 30,439.10 crore; Up 6.8% YoY
EBIT
Rs 5638.50 crore; Up 12.4% YoY
Profit
Rs 4448.80 crore; Up 11.6% YoY
JM Financial
Revenue
Rs 29,986.40 crore; Up 5.2% YoY
EBIT
Rs 5492.10 crore; Up 9.4% YoY
Net profit
Rs 4332.60; Up 8.7% YoY
Sharekhan
Sales
Rs 30,325 crore; Up 6.4% YoY
OPM
21.8%; Up 40 bps
Net profit
Rs 4349 crore; Up 9.1% YoY
Kotak Institutional Equities
Revenue
Rs 30,356.60 crore; Up 6.5% YoY
EBIT
Rs 5516.60 crore; Up 10.1% YoY
Adjusted net profit
Rs 4369.60 crore; Up 9.6% YoY
ICICI Securities
Revenue
Rs 30,573.00 crore; Up 7.3% YoY
EBIT
Rs 5766.20 crore; Up 14.8% YoY
Adjusted net profit
Rs 4354.50 crore; Up 8.9% YoY
Key monitorables
In terms of key monitorables, analysts said that investors and market participants will keep an eye on:
(1) decision making slowdown and impact of macro deterioration on the overall business,
(2) new deal TCV that has been fairly modest over the past few quarters,
(3) impact to revenues, if any, from Verizon deal anniversary,
(4) revenue growth in June quarter, a seasonally weak quarter for the company,
(5) strength of discretionary spending environment, a necessity noting lack of mega-deals, and
(6) environment required to hit an aspirational margin band of 19-20%.