HCLTech Q3 Results Review - Guidance Upgrade Dampens Enthusiasm; Motilal Oswal Reiterates 'Buy' On The Stock

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Motilal Oswal Report

HCLTech Ltd. reported a revenue of $3.5 billion, up 3.8% QoQ and 4.1% YoY in constant currency, above our estimate of 3.7% QoQ CC growth (largely owing to one-month inorganic contribution from HPE CTG acquisition).

Ebit margins came in at 19.5%, beating our estimate of 19.1%. New deal total contract value stood at $2.1 billion (down 5.5% QoQ) in Q3 FY25. For FY25, the revenue growth guidance has been upgraded to 4.5%-5.0% YoY cc (including a ~50 bp contribution from the HPE CTG acquisition, with organic growth at 4.0%-4.5%) from the earlier range of 3.5%-5.0%.

For Q4 FY25, the implied organic growth for ITB&S is now in the range of -1.6% to +0.6% QoQ in cc, which is a downgrade, in our view.

For 9MFY25, revenue/Ebit/PAT grew 6.6%/6.5%/11.7% compared to 9MFY24. We expect revenue/Ebit/PAT to grow by 7.3%/6.6%/7.3% YoY in Q4 FY25. We reiterate our Buy rating on HCLTech with a target price of Rs 2,400, implying a 21% potential upside.

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