Will HCL Tech Q2 results 2020 beat estimates? CLSA, Citi, Macquarie, others shed light

Will the earnings beat analysts’ estimates? Here is what Citi, Macquarie, BofA, Kotak Securities expect ahead of HCL Tech Q2 FY21 earnings:-
 
CLSA expects $ 2489 mn Revenue which is 5.6% higher than last quarter (QoQ) and 0.1% higher than last year (YoY). Margins are expected to come in at 20.7% which is 21 bps more than last quarter (QoQ) and 78 bps more than last year (YoY).  The profit is expected to be around Rs 3038 cr which is 3.9% higher than last quarter (QoQ) and 14.6% higher than last year (YoY).

Citi expects dollar revenue growth of 6% (QoQ) to $2498 mn in Q2 FY21 vs $2356 mn in Q1 FY21 and improved 0.5% (YoY) from $2486 mn in Q2 FY20. Revenue in rupee terms will improve 3.6% (QoQ) to Rs 18,484 cr from Rs 17,841 cr and will grow 5.5% from Rs 17,528 cr (YoY). EBIT margin will recover 3 bps to 20.5% from 20.5% (QoQ) and 59 bps from 20% (YoY). Profit is expected to improve 2.1% (QoQ) to Rs 2983.7 cr from Rs 2923 cr and 12.5% from Rs 2651 cr (YoY). Citi expects revenue growth of 3.7% in CC terms (230 bps cross currency benefit QoQ). Margins likely to remain flattish, post the good performance last quarter. Key things to watch is FY21 revenue outlook deal wins , P&P (Products and platforms) and IMS (Integrated management system) outlook.
 
Macquarie expects dollar revenue growth of 5.4% (QoQ) to $2483 mn in Q2 FY21 from $2356 mn in Q1 FY21 and remains flat (YoY) from $2486 mn in Q2 FY20. . In CC, this would translate to growth of 3.6% QoQ and degrow by 1.6% YoY. Our growth assumption models 6% for IT services, 6% for ER&D (Engineering R&D)and 3% for products business in US $ terms (QoQ). Revenue in rupee terms will improve 4.4% (QoQ) to Rs 18,625 cr from Rs 17,841 cr and grow 6.3% (YoY) from Rs 17,528 cr. EBIT margin will remain flat at 20.7% (QoQ) and will improve 20 bps from 20,5% (YoY) and improve 70 bps from 20% last year Q2 FY20. Profit is expected to improve 3% (QoQ) to Rs 3013 cr from Rs 2925 cr and to improve 13.3% from Rs 2659 cr (YoY).
Macquarie says key things to watch out for would be-
1) Deal booking and pipeline
2) Medium-term demand outlook including cloud transformation and vendor consolidation
3) Outlook on higher outsourcing and offshoring potential post the pandemic
4) Pricing outlook
5) M&A strategy
 
BofA expects dollar revenue to grow 6.2% (QoQ) to $2501 mn in Q2 FY21 and to grow 0.6% (YoY). Revenue in rupee terms will improve by 3.7% (QoQ) to Rs 18,505 cr and improve 5.6% (YoY). In CC terms, this would translate to 230 bps QoQ improvement. EBIT margin will sequentially improve by 30 bps to 20.8% from 20.5% (QoQ) and will improve by 87 bps (YoY) from 20%. Profit is expected to improve 1% (QoQ) to Rs 2405 cr and degrow by 6% (YoY).
 

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Kotak Sec expects $ 2485 mn Revenue which is 5.5% higher than last quarter (QoQ).
 
Nomura expects $ 2484 mn Revenue which is 5.5% higher than last quarter (QoQ) and 0.1% lower than last year (YoY). Margins are expected to come in at 20.8% which is 20 bps higher than last quarter (QoQ) and 80 bps more than last year (YoY). The profit is expected to be around Rs 2989 cr which is 2.2% higher than last quarter (QoQ) and 12.7% higher than last year (YoY).

(Authored by Rahul Kamdar)