After a better-than-expected start to the earnings season from Tata Consultancy Services (TCS), investor attention now shifts to HCL Technologies, which is scheduled to report its June quarter (Q1FY27) results on Monday, July 13.
Brokerages expect HCLTech to deliver a mixed set of numbers, with steady year-on-year growth but sequential weakness in revenue. Margins, however, are expected to remain resilient, supported by favourable currency movements and cost efficiencies. Based on the average estimates of five brokerages, HCLTech's net profit is expected to rise 18% year-on-year, while increasing sequentially in rupee terms, aided by currency depreciation.
Here's what six brokerages expect
Morgan Stanley: Morgan Stanley expects Q1 revenue to decline 1.8% QoQ in US dollar terms, while growing 2% YoY. Net profit is expected to fall 2% sequentially but rise 6% year-on-year. The brokerage expects HCLTech to maintain its FY27 revenue guidance, although it believes consensus estimates could still be revised lower.
BNP Paribas: BNP Paribas expects services revenue to decline 1.5% QoQ in constant currency, reflecting higher-than-usual first-quarter seasonality, while the software business is expected to contract 5% QoQ on seasonal trends. Overall revenue is projected to decline 1.8% QoQ. The brokerage expects services EBIT margin to contract around 50 basis points, while the software business could see a 150-basis-point expansion. Overall EBIT margin is expected to improve 20 basis points QoQ to 16.7%, supported by favourable cross-currency movements, partly offset by client productivity pass-throughs.
Kotak Institutional Equities: Kotak expects constant currency revenue to decline 0.6% sequentially, while growing 2.9% year-on-year. The services business is expected to decline 1.1% QoQ due to seasonal factors and ramp-downs in a couple of accounts, while the products business is likely to grow 1% QoQ. The brokerage expects EBIT margin to improve by 30 basis points sequentially and 50 basis points year-on-year, with restructuring charges remaining below the 122 basis points recorded in Q4FY26. Kotak expects HCLTech to retain its FY27 revenue growth guidance of 1-4% for the overall business and 1.5-4.5% for the IT services segment.
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Nuvama Institutional Equities: Nuvama expects revenue to decline 1.1% QoQ in constant currency and 1.3% QoQ in US dollar terms, primarily due to a 1.5% sequential decline in the services business. The brokerage expects EBIT margin to expand by 40 basis points QoQ, aided by favourable currency movements. It expects HCLTech to maintain its FY27 guidance, with IT services revenue growth of 1.5-4.5% in constant currency and an EBIT margin guidance of 17.5-18.5%.
Axis Direct: Axis Direct expects revenue growth of 3.5% QoQ, with headwinds from client-specific accounts and seasonal weakness in the software business likely to be partially offset by the benefits of rupee depreciation. It expects EBIT margin to decline 40 basis points QoQ due to restructuring costs and higher investments. The brokerage will closely watch management commentary on the Services and ER&D businesses, software performance, the deal pipeline and FY27 revenue guidance.
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What to look out for in HCL Tech's Q1 results
Brokerages expect investors to focus on AI-led revenue growth, particularly the contribution from AI-amplified and AI-native services, the extent of AI-driven pricing deflation, pricing pressure in the core business and its impact on margins, and the factors that could accelerate revenue growth. Investors will also track profitability, execution in cost-take-out and vendor consolidation deals, and HCLTech's ability to generate new AI-led revenue streams to offset any deflationary impact.
Other key monitorables include updates on client-specific issues, the outlook for the services and software businesses, commentary on client spending, hiring plans, investments in GenAI partnerships and solutions, and inorganic revenue contribution.
Some brokerages expect HCLTech to lower the upper end of its FY27 revenue growth guidance by one percentage point to 1-3% for the overall business and 1.5-3.5% for the services business, while retaining its EBIT margin guidance of 17.5-18.5%.
