Software firm HCL Technologies is expected to report healthy growth in October-December 2018 quarter as revenue in constant currency terms is likely to grow in the range of 2.5-3.9 percent sequentially and the same in dollar term is seen growing around 2.1-3.2 percent for the quarter.
Sharekhan expects maximum 3.9 percent sequential revenue growth in constant currency terms driven by ramp up of large deals and a strong season for product business.
Kotak Securities said the distribution of revenue growth is as follows: (1) organic constant currency revenue growth rate of 3 percent, (2) contribution from H&D International of $21 million, or 1 percent, and (3) cross-currency headwind of 70 bps.
Large deal contribution is expected to be from IMS business and seasonal strength in its IP business.
ICICI Securities and Edelweiss Securities expect dollar revenue growth of 2.1 percent QoQ and rupee revenue to grow around 3.8-3.9 percent sequentially in Q3.
On the full year forecast front, Kotak Securities expects HCL Technologies to maintain 9.5-11.5 percent constant currency revenue growth guidance. "Organic revenue growth for FY19 will be higher than the earlier expected 5.25 percent."
Profit for the quarter could grow in the range of 1-2 percent, according to brokerages except Motilal Oswal which expects over 6 percent decline in bottomline.
Brokerages expect expansion in operating margin in the range of 20-70 basis points QoQ.
"EBIT margins could expand 20 bps QoQ to 20.2 percent owing to IP seasonality & rupee benefit partly countered by partial wage hike (around -70 bps)," ICICI Securities said while Edelweiss Securities said margin may benefit from INR depreciation and rise 70 bps QoQ.
Kotak Securities expects EBIT margin to increase 40 bps sequentially led by revenue uptick and sharp sequential growth from higher margin IP business.
Key things to watch out for
> Products business strategy in light of aggressive acquisitions
> Synergies in services business from product acquisitions
> Sustainability of growth in IMS
> Measures to turn around underperforming applications business
> Outlook on ER&D segment
> Update on IP partnerships and deal pipeline
> Update on IBM product acquisition
> Traction in Digital
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Source: Moneycontrol
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