The IT major further said the earnings before interest and tax (EBIT) margin for the quarter is expected to be between 20.5 per cent and 21 per cent. Good booking momentum continues this quarter, led by life sciences & healthcare, telecom & media and financial services verticals. The pipeline continues to look healthy across service lines, verticals and geographies, it said.
"HCL Tech indicated strong execution in the quarter update while deal ramp-up to drive revenue growth of at least 3.5 per cent quarter on quarter (QoQ), higher than 1.5-2.5 per cent growth rate guiding earnings call of Q1FY21. We believe 1 per cent of revenues will be added in FY21 due to DWS acquisition. Going forward, HCL Tech may initially increase 1.5-2.5 per cent sequential revenue growth guidance for Q3 and Q4 on organic basis to 2-3 per cent," analysts at Prabhudas Lilladher said in an earnings preview note.
Those at HSBC Securities don't expect any change in 1.5-2.5 per cent sequential growth guidance for Q3 and Q4 but believe that if management alludes to higher confidence in the upper end of the guidance, that could be a positive surprise.
"We estimate 3.5 per cent constant currency (cc) growth for HCL Tech. Strong EUR and GBP should add another 170bp to USD growth. Margins should be within a narrow range as compared with Q1. We expect margins to expand marginally (20bps). The key focus areas are commentary on renewal demand for products and platforms (especially IBM IP) along with demand recovery in ER&D will be crucial," the brokerage firm said.