HCLTech Q1 Preview: Modest Revenue, Profit Growth Expected With Stable Margin

HCLTech is expected to report modest sequential growth in the June quarter, with margins seen improving slightly as analysts turn their focus to FY27 guidance and management commentary on the demand environment. The company is set to announce the results for Q1FY27 on Monday, July 13.

According to Bloomberg estimates, HCLTech is expected to report constant-currency IT services revenue growth of 3.25% for the quarter, reflecting steady demand across its key markets. The company's operating profit (EBIT) is projected at Rs 5,761.4 crore, while the operating margin is seen at 16.96%.

HCLTech Q1 Preview (Bloomberg Estimates, Consolidated, QoQ)

• Revenue seen 2% higher at Rs  34,326 crore versus Rs  33,684 crore
• EBIT seen 5% higher at Rs  5,808 crore versus Rs 5,553 crore
• EBIT Margin seen at 16.97 % versus 16.48%
• Profit seen 2% higher at Rs 4,529 crore versus Rs 4,446  crore.

Brokerages broadly expect HCLTech to retain its FY27 guidance, although Goldman Sachs sees the company narrowing its revenue growth range by raising the lower end and lowering the upper end by 50 basis points each. Analysts also expect management to provide an update on demand trends and the outlook for FY27 and FY28, with the June-quarter performance taking a back seat to forward-looking commentary.

Investors will also track the company's workforce trends, with total headcount estimated at 2,47,589, for clues on hiring activity.

Here's what analysts are expecting from HCLTech Q1 results:

Goldman Sachs

• Expects FY27 revenue growth of 3.1%, including 3.7% growth in services.
• Sees downside risk to the upper end of FY27 guidance.
• Expects HCLTech to narrow its FY27 guidance by raising the lower end and lowering the upper end by 50 basis points each.
• Anticipates a modest sequential revenue decline.
• Margins expected to remain range-bound despite foreign exchange tailwinds due to competitive pressures and reinvestments.

CLSA

• Retains a positive stance on HCLTech and continues to rank it among its preferred large-cap IT stocks.
• Expects no change to FY27 revenue growth guidance of 1%-4%.
• Expects no change to FY27 EBIT margin guidance of 17.5%-18.5%.

Bank of America

• Expects HCLTech to retain FY27 revenue guidance of 1%-4%.
• Believes management has the best visibility around the midpoint of the guidance range.
• Estimates the company needs about 2% compound quarterly growth to achieve the midpoint of its FY27 services revenue guidance.

Jefferies

• Expects HCLTech to maintain FY27 growth guidance.
• Forecasts margins to remain broadly range-bound, supported by favourable foreign exchange movements.
• Expects the company to retain services revenue growth guidance of 1.5%-4.5% year-on-year in constant currency.
• Says investor focus will remain on the FY27 and FY28 outlook rather than the June-quarter performance.

Elara Capital

• Expects HCLTech to maintain FY27 revenue growth guidance despite a weak June quarter.
• Forecasts the company will retain its FY27 EBIT margin guidance.
• Expects EBIT margin to improve by about 20 basis points quarter-on-quarter.

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