HCL Tech Q1 preview: What to expect amid tariff jitters, seasonal weakness

HCL Technologies is expected to post a 3.76 per cent decline in net profit for the first quarter, sequentially

Technology giant HCL Technologies is likely to see a sequential dip in its revenue and net profit, weighed by the services and products segments amid a seasonal weakness. 

 

The information technology (IT) firm will report its earnings for the quarter ended June on Monday, July 14. 

 

HCL Technologies' revenue is expected to fall by 0.02 per cent quarter-on-quarter (Q-o-Q) to ₹30,240.28 crore, according to analysts tracked by Business Standard. Seasonal pass-through of productivity benefits is likely to drag down sequential services revenue growth in Q1, analysts said. 

 

However, the company is expected to post a 3.76 per cent decline in net profit for the first quarter sequentially to ₹4,145.13 crore. Even on a year-on-year (Y-o-Y) basis, the net profit is expected to fall at an average of 2.65 per cent. 

 

Margins for the IT bellwether will likely decline sequentially, in sync with the decline in the services business and the usual productivity pass resets, analysts said.

 

HCL Technologies reported an 8.10 per cent rise in net profit to ₹4,309 crore for the quarter ended March 2025. Revenue for the quarter increased by 6.13 per cent to ₹30,246 crore from ₹28,499 crore. 

Here's how analysts of various brokerages expect HCL Technologies to fare in Q1:

Kotak Securities: The brokerage expects HCL Technologies to report a sequential decline of 0.8 per cent in constant currency revenue for the June quarter, weighed by seasonal weakness in its IT services business. Revenue from both the Services and Products segments is likely to contract 0.8 per cent on a Q-o-Q basis.

 

Cross-currency tailwinds of around 214 basis points are expected to partly offset the topline weakness. However, operating margins may come under slight pressure. Kotak sees Ebit margins declining 60 basis points sequentially, reflecting the impact of lower services revenue and typical resets in productivity gains. 

 

Despite the soft quarter, the brokerage anticipates healthy deal wins in the range of $2 billion to $2.5 billion. Kotak expects the company to maintain its full-year guidance of 2-5 per cent revenue growth and 18-19 per cent Ebit margin.  ALSO READ | TCS Q1 result: Net profit rises 6% to ₹12,740 cr; interim dividend declared  

ICICI Securities: HCL Technologies will likely post muted performance in the June quarter, with revenue likely to grow 1.3 per cent in US dollar terms but decline 0.4 per cent on a constant currency basis. The sequential softness is attributed to the anniversary impact of large deals, with weak demand persisting in the auto segment within manufacturing. In contrast, demand remains steady in the banking, financial services and insurance (BFSI), energy, and utilities verticals. 

The brokerage noted that overall demand conditions remain largely unchanged, with cost optimisation and vendor consolidation driving deal activity. However, discretionary spending continues to stay subdued.

 

ICICI Securities expects Ebit margins to decline by around 100 basis points Q-o-Q to 17 per cent, citing pressure from revenue softness and the appreciation of the Indian Rupee against the US Dollar.

 

Motilal Oswal: Analysts expect HCL Technologies to report a 1.2 per cent sequential decline in revenue for the June quarter, citing seasonal weakness. The Services segment is likely to contract 1.2 per cent in constant currency terms.   ALSO READ: Vedanta Chairman Anil Agarwal fends off Viceroy Research's volleys 

Among verticals, the brokerage expects relatively better performance from the BFSI and hi-tech segments. However, pressure is likely to persist in manufacturing, particularly in the auto sector, although some signs of stabilisation are emerging.

 

Operating margins are projected to shrink by 50 basis points Q-o-Q, reflecting the typical seasonal reset seen in first quarters over previous years.

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