The Noida-based company should give out 12 per cent - 14 per cent revenue growth guidance with a little more than half coming from organic growth and the remaining coming entirely from the IP (intellectual property) deal that it has signed with IBM, the brokerage says.
In December 2018, HCL Technologies announced it will acquire select IBM software products for $1.8 billion (approximately Rs 127 billion) in an all-cash deal.
EBIDTA (earnings before interest, depreciation, tax and amortisation) is likely to come in at Rs 3,704.4 crore, up 1.6 per cent QoQ and 22 per cent YoY while net profit or PAT (profit after tax) is seen at Rs 2,578.7 crore, up 15.8 per cent YoY and down 1.2 per cent, sequentially, according to ICICI Securities.
Centrum Broking Wealth expects HCL Tech's revenue growth in CC terms to grow by 2.6 per cent. "After three consecutive quarters of depreciation, the rupee has appreciated modestly against the US dollar and acts as a modest headwind. Hence, we expect margins to drop on a sequential basis," the brokerage says. It expects EBITDA margin to come in at 22.7 per cent, down 43.4 basis points (bps) QoQ and 34 bps YoY.
Over the last year, shares of HCL Tech have outperformed the benchmark S&P BSE Sensex by surging 23 per cent between May 8 2018 - May 2019. In comparison, the S&P BSE Sensex has gained around 7 per cent while the S&P BSE IT index has rallied over 19 per cent during the same period.
Key monitorables for the quarter under review include demand outlook for offshore business, growth in top-10 clients, onshore business strategy, ramp-up at the North Carolina center and deal pipeline.
Analysts at Nirmal Bang Securities say that with a large acquisition of select IBM products slated for mid-2019, the company is not expected to go for any further IP related purchases in the near future. Progress in IMS (infrastructure management services) business and BFSI (Banking, financial services, and insurance) space will also be keenly watched.