HCL Tech Q4 result today: From key numbers to growth guidance, here are 5 crucial things to watch out for

HCL Tech Q4 result today: Indian IT companies have been going through a rough patch and it is expected that the March quarter (Q4) results of IT major HCL Technologies will reflect this trend.

The IT player is to release its Q4FY24 results on Friday, April 25, which is expected to be a tepid show. According to experts, the company's revenue, profit, and margin may decline on a quarter-on-quarter basis.

During the March quarter, HCL Tech's share price outperformed the Nifty IT index as well as the benchmark Nifty 50. While HCL Tech stock rose 5 per cent, Nifty IT index fell 2 per cent and Nifty 50 climbed 3 per cent during Q4FY24.

Investors are likely to keep a close eye on the management commentary on deal wins ramp-up and the demand scenario.

Let's take a look at five crucial points that investors will focus on when HCL Tech discloses its Q4FY24 result:

Key numbers

The numbers are expected to come out weak sequentially.

According to brokerage firm Motilal Oswal Financial Services estimates, HCL Tech's Q4 revenue in rupee terms may rise 7.9 per cent YoY but sequentially, it may come out flat. Adjusted PAT may rise 6.8 per cent YoY but fall 2.3 per cent QoQ.

EBIT can rise 10.4 per cent YoY but may decline 5.4 per cent QoQ. Motilal expects a 120 bps QoQ fall in EBIT margin.

As per Nirmal Bang, HCL Tech's revenue in rupee terms may rise 7.6 per cent YoY and 0.6 per cent QoQ. In constant currency terms, revenue may inch up 0.5 per cent QoQ. PAT can grow 6.2 per cent YoY but down 2.8 per cent QoQ.

EBIT may rise 10.3 per cent YoY but down 5 per cent QoQ. EBIT margin may decline 110 bps QoQ to 18.6 per cent against 19.7 per cent in Q3FY24.

Growth guidance

Motilal Oswal expects HCL Tech to provide an initial FY25 revenue growth guidance of around 10 per cent, with a stable-to-improving EBIT margin.

Nirmal Bang pointed out that after a weak first half of FY24, HCL Tech had revised its CC growth guidance downward from 6-8 per cent to 4-6 per cent (5-6 per cent including the ASAP acquisition) for FY24 and it further lowered the upper end of the guidance to 5-5.5 per cent in Q3FY24 including inorganic growth.

Nirmal Bang expects HCL Tech to give revenue growth guidance of 4-7 per cent in CC terms for FY25.

Demand outlook

One of the most crucial points that investors will keenly observe is the company's demand outlook for ER&D (engineering, research and development) services, P&P (product and platform), business application, IMS (infrastructure management services) and digital services in FY25E.

Deal wins/pipelines

Deal pipelines and deal wins in Q4FY24 will be the focus of investors.

After recording the highest-ever TCV (total contract value) number of $3.97 billion in Q2FY24, TCV for Q3FY24 moderated to $1.93 billion and came in at the lower end of the earlier guidance range of $2-2.5 billion, Nirmal Bang observed. For Q4FY24, Nirmal Bang expects TCV to come in the guided range on the back of a healthy pipeline.

Impact of macro headwinds

How the evolving macroeconomic situation is going to impact HCL Tech's growth and its clients, if any, will also be in focus. The management commentary of Infosys and Wipro signalled that the worst may not be behind for the IT sector. However, TCS' management sees situations improving. Investors will focus on how HCL Tech sees the road ahead for itself.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.