HCL Tech shares trading flat ahead of Q4 earnings; here’s what to expect

Shares of HCL Technologies, the third largest IT services company in India, were trading on a flat note ahead of the company's Q4 earnings set to be announced today. The stock dipped 0.30 per cent intraday to ₹1,035.60 against the previous close of ₹ ₹1,037.50 on NSE.

The stock is down 4. per cent in the last five days and 5 per cent in a month. HCL Tech shares hit a 52-week high of ₹1156.8 on 3 Feb, 2023 and a 52 week low of ₹875.65 on 29 August, 2022.

HCL Technologies will release its March quarter earnings today, days after its peers TCS and Infosys posted mute set of Q4 numbers.

The company's board will also consider its first interim dividend for fiscal 2023-24 on 20 April, 2023.

According to the fourth quarter earnings preview, the January to March numbers are not all encouraging, primarily due to seasonal weakness. "Q4 is seasonally a weak quarter due to fewer working days and furlough impact in January," said domestic brokerage ICICI Direct.

Most brokerage houses are expecting a decline in constant currency revenue on a sequential basis, and margins may contract too for the fourth quarter.

Motilal Oswal expects HCL Tech to post muted growth due to a seasonal drag in HCL Software. The brokerage expects the margin to decline 150 bp QoQ largely due to a seasonal decline in HCL Software. However, it believes the company's IT Services will remain strong in 4QFY23.

IDBI Capital sees revenue growth (in CC) terms to decrease by 1 per cent QoQ with a cross-currency tailwind of 15 bps, mainly due to seasonal softness in product revenue. While EBIT margin may taper down by 99 bps QoQ mainly led by a decline in revenue growth.

Investors will keep an eye out for the outlook on product business, outlook on ER&D business given the turmoil in Europe. Management commentary on the deal pipeline, especially large deals, and pricing, attrition trend, margin outlook, M&A plans, tech spends by clients will also be considered.