Shiv Nadar-backed IT player, HCL Technologies will be in focus on Monday, July 14, as the company will declare its June 2025 quarterly results. Apart from this, HCL is likely to declare an interim dividend for FY26. In Q1, HCL is expected to report between a flattish to marginal decline in EBIT margins, while cross-currency tailwinds are likely to take a toll on its top line. However, HCL's earnings look better than its rival TCS.
HCL Tech Q1 Results Preview:
A board meeting is scheduled on July 14 to consider both consolidated and standalone financial results for the quarter ending June 30, 2025.
The majority of experts predict a below 1% decline in HCL's revenue.
Analysts at Kotak Institutional Equities said, "We forecast c/c revenue decline of 0.8% due to seasonal weakness in the IT Services business. We forecast a qoq revenue decline of 0.8% each in the Services and Products segments. Cross-currency tailwind for the quarter stands at 214 bps."
Meanwhile, analysts at Prabhudas Lilladher predict revenue to witness a 0.4% QoQ CC decline while in USD terms, revenue growth of 1.4% QoQ is seen, due to currency tailwinds of 180bps.
However, analysts at Axis Securities predict revenue growth of 0.3% QoQ on account of weak service business and operating margin to contract by 44bps.
Additionally, analysts at Emkay Global built in 1.4% QoQ USD revenue growth after factoring in the 200bps cross-currency tailwinds. They said, "Seasonality of productivity benefits pass-on is expected to weigh on sequential growth in services revenue in Q1.
Emkay expects the EBIT margin to be flat sequentially. On the other hand, Prabhudas Lilladher analysts predict EBIT margin to decline by 70bps QoQ due to lower gross margin.
Along similar lines, Kotak's experts believe EBIT margins will likely decline by 60 bps qoq, in sync with the decline in the Services business and the usual productivity pass resets. EBIT margins will increase by 20 bps yoy.
In case of deal wins, Kotak's analysts said, "We expect healthy TCV of deal wins in the US$2-2.5 bn range. HCLT management highlighted the strong pipeline and likely closures of large deals in 1QFY26. We expect the company to retain 2-5% revenue growth guidance for FY2026 and 18-19% EBIT margin guidance."
"We expect deals to win in the band of USD2.5-3 bn driven by cost optimisation deals with elongated decision making. We expect HCLT to maintain its revenue & margin guidance," said Prabhudas Lilladher's analysts.
Key Factors To Focus On HCL Tech's Q1 Results:
Key things to watch out in HCL's Q1, as per Emkay are --- "1) FY26 outlook - we expect the company to narrow its revenue growth guidance to 3- 5% CC (earlier 3-6%) while retaining its 18-19% EBITM guidance; 2) CY25 IT budget and any impact on clients' spending behaviour due to increased macro and geopolitical uncertainties; 3) Deal wins, deal pipeline and pace of deal closures; 4) growth outlook for ER&D and Software businesses; 5) Demand outlook for major verticals like BFSI, Manufacturing, Technology, Communications, Retail, and Healthcare; 6) pricing environment; 7) Progress on AI Force platform deployment across clients; and 8) Hiring plan and attrition trends."
In Kotak's opinion, "We expect investor focus on: (1) the impact of reciprocal tariffs imposed by the US on the directly impacted segments of manufacturing and retail, (2) the nature of deals in the pipeline and likely closure timeframe, (3) the state of discretionary spending, (4) pace of enterprise GenAI adoption, new opportunities consequent to AI adoption and likely deflationary impact, and (5) the environment required to hit the aspirational margin band of 19-20%."
For the full year 2024-25 fiscal, HCL Tech's net income stood at Rs 17,390 crore, rising by 10.8% year-on-year. In the top line, revenue climbed by 6.5% YoY to Rs 117,055 crore. Constant currency revenue growth for the full fiscal year came in at 4.7% YoY. In dollar terms, HCL's revenue jumped by 4.3% YoY to $13,840 million.
HCL Tech Interim Dividend:
On July 14, HCL will also report the interim dividend for FY26. The record and payment date for the upcoming dividend will be announced accordingly.
HCL Tech is among the top dividend-paying IT companies in India. Since June 2003, the mega tech player has delivered as many as 23 dividends, as per Trendlyne data. In the past 12 months, the dividend payout was to the tune of Rs 6.25 per share. Currently, HCL has a dividend yield of 2.54%.
HCL Tech Share Price:
Last week, on July 11, HCL Tech share price closed at Rs 1637 apiece on BSE, down by 1.6% with a market cap of Rs 4,44,226.98 crore. Overall, during the July 7-11 weekly performance, HCL's shares dropped by nearly 4%. YTD, HCL is down by 14.4%.
HCL Tech Share Price Recommendation:
Kotak has recommended 'REDUCE' with a target price of Rs 1,723. Similarly, Prabhudas Lilladher has suggested REDUCE with Rs 1530 TP.
HCL is among the top picks of Axis Securities, but the target price is not available. Emkay has also given a REDUCE rating with a target price of Rs 1,750.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.
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