HCL Tech Gears Up for Q4 Earnings Amidst Sectoral Watchfulness

The Indian tech industry continues to be in the limelight as HCL Technologies gets ready to post its fourth-quarter earnings, due on Tuesday, April 22nd. However, the markets have been neutral as there is not much movement in the stock price. This comes amid a line of earnings posted by its peers, TCS, Wipro, and Infosys, that have painted a picture of incremental growth, with investors eagerly looking out for any possible indication of a turnaround from HCL Tech.

Market experts are expecting a year-over-year revenue growth of 6–8% for HCL Tech in the range of ₹30,450–₹30,730 crore in Q4. On a sequential front, revenue is expected to witness a growth of 2–4%. However, other experts tracked by Business Standard predicted a more subdued sequential revenue growth of 1.28% to ₹30,273.2 crore, citing seasonally managed declines in product sales and lingering macroeconomic uncertainty.

On the profitability front, the indications are that net profit could grow 7–9% year on year, between ₹4,250 and ₹4,550 crore. On a sequential basis, though, net profit could see a minor decline of 1–2%.

One of the major areas of concern will be HCL Tech's EBIT margin, which is expected to decline by 60–100 basis points, coming in at 16–16.5%. This possible decline is due to reasons like salary increases and a weaker performance in the software business. It is interesting to note that the depreciation of the rupee could provide some cushioning against these margin squeezes.

Looking ahead, investors will be particularly attentive to the company's revenue and margin guidance for the financial year 2026. Furthermore, the details of new deal wins secured during the March quarter, the announcement of a final dividend for FY25, and the management's commentary on discretionary spending and the broader demand outlook amidst global economic uncertainties and US tariff concerns will be closely analysed.

The shares of HCL Tech are currently trading at ₹1,475.50, a 0.50% drop from the opening. The stock has lost 22.7% since the start of the year. Prior to the results, the share price of HCL Tech had rallied more than 10% in the last three weeks, hitting resistance near its 21-day exponential moving average (EMA). Traders are likely to look at price behavior near the 21 and 50 EMAs for further directional indications after the earnings announcement.

Overall, HCL Tech's Q4 is set to give important guidance on the resilience of the company and prospects for growth in the face of a challenging global economic backdrop. The market will be looking at the bottom line numbers and management's guidance for signs of steady growth and margin resilience in the next fiscal year.

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