The Conviction And The Caution

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HCLTech Reports Today: The Street Expects a ~15% Profit Rise, but Guidance Is the Real Test

Quick take: HCL Technologies is due to report Q2 FY27 numbers today, and the brokerages that publish estimates are looking for double-digit profit growth. The harder question is whether management nudges its revenue guidance higher, because IT stocks have been sensitive to outlook language this earnings season.

The market backdrop

The Sensex opened at 72,771.32, up about 299 points from Friday’s 72,472.33, helped by a stronger rupee (95.75 per dollar versus 96.73 on Friday) and softer crude. The gains did not hold. Around midday the Sensex was near 71,904, down about 568 points (-0.78%), and the Nifty 50 was near 22,369, down about 151 points (-0.67%). Business Standard’s live blog said IT, FMCG and bank shares weighed on the indices, with Tech Mahindra among the Sensex laggards. Smallcaps held up better, with the Nifty Smallcap index up about 1%.

What the Street expects from HCLTech

Business Standard’s preview collects the main estimates. Kotak Institutional Equities expects adjusted net profit of about ₹4,901 crore (up 15.1% year on year and 6% quarter on quarter) on revenue of about ₹36,013 crore (up 12.7%). Axis Direct is at roughly ₹4,910 crore profit (up 15.9%) on revenue of about ₹35,443 crore (up 11%). Jefferies expects constant-currency revenue to rise 2.7% sequentially, including about 100 basis points from acquisitions, and an EBIT margin of 17.6%.

Why guidance matters more than the headline

Brokerages differ on the outlook. Kotak thinks total revenue growth guidance could move up to 3-4% from 1-4% (including about 100 bps from acquisitions), with the 17.5-18.5% EBIT margin band retained, possibly toward the lower end. Jefferies expects FY27 services revenue growth guidance to be narrowed by 50 bps to 2-4%. Kotak also expects strong total contract value of about $3.75 billion, linked to a €1 billion mega deal and a large Guardian Life contract. Those are estimates, not reported results, and the actual numbers may differ.

The board will also consider a third interim dividend for FY27; two interim payouts totalling ₹36 per share have already been made this fiscal.

Key levels and flows to keep in view

The Nifty is hovering just under 22,400. On October 9, foreign institutional investors sold ₹3,568.90 crore of equities while domestic institutions bought ₹4,743.26 crore, according to the figures cited in market reports. Choice Broking’s Deepesh Sarawagi described the setup as only selectively constructive, flagging persistent FII selling and upcoming inflation data as risks. Earlier this month, TCS’s results sparked a sharp IT bounce (see our October 9 note), so the sector now has a high bar to clear.

What to watch next

Results land after the session, so the first reaction will come on Tuesday. Watch three things: the revised revenue guidance range, whether the EBIT margin stays inside the 17.5-18.5% band, and the size of deal wins. Also watch the read-across to Tech Mahindra, TCS and the broader Nifty IT index, and whether FII selling eases.

Sources

Disclaimer: This post is for educational and informational purposes only and is not investment advice. Consult a SEBI-registered advisor before investing.

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