Analysts expect HCL, India’s fourth largest IT services firm, to show a stable performance in an otherwise not-so-strong September quarter with projections of its quarterly revenue growth, in constant currency terms, hovering around 2.4 percent to 2.6 percent.
In the June quarter, HCL had surprised the market by revealing that it expected a 12-14 percent revenue growth in this financial year. In the last quarter, the company reported 6 percent sequential growth in revenue.
Two major brokerage firms expect IT companies to witness a decline of 100-150 basis points in operating margins due to factors such as wage hike of employees, cross-currency headwinds and continued investments in the business.
The company's share price closed 1.78 per cent down at Rs 815.25 on the BSE.
Analysts said that growth momentum should continue in the company’s IMS business under its telecom vertical and there would be some revival in the BPO sector after it declined sharply in the last quarter. “Deal signings over the last many quarters provide visibility and confidence in executing its projected revenue growth guidance,” brokerage firm Motilal Oswal said.
In the first quarter, HCL Technologies signed thirteen deals across service lines and industry verticals. Major business deals were driven by investments in automation, digital technologies, and cloud services that materialised into Next-Gen ITO, BEYONDigital and Internet of Things.
Here are a few things to watch out for in Q2 results-
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Comment on performance and guidance: It will be important to watch out whether the company continues to stay bullish and maintain its revenue guidance, despite uncertainties in the industry.
New Deals: The first quarter has been effective for the company in terms of new deals. Analysts expect deals in Q2 are going to ascertain the company’s growth for the rest of the financial year.
Growth in IMS and Engineering: Some experts feel that the IMS, which has been performing well for the company, has driven growth in Q2 this year. However, one should also keep a close watch on the company's performance in the engineering service sector.
