HCL Tech Q3 Results Review - HCL Software Springs A Positive Surprise: Nirmal Bang
Ebit margin expanded by 165 bps QoQ against our estimate of 60 bps expansion, largely driven by the significant P&P outperformance
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Nirmal Bang Report
HCL Technologies Ltd. in Q3 FY23 delivered CC QoQ revenue growth of 5% (13.1% YoY), much above the 3% growth that we were estimating, largely driven by the 30.5% QoQ growth delivered by HCL Software (products and platforms business). We were assuming a 10- 15% growth for P&P.
Ebit margin expanded by ~165 basis points QoQ against our estimate of 60 bps expansion, largely driven by the significant P&P outperformance (higher margin).
HCL Tech has reduced the revenue growth guidance for FY23 to 13.5-14% in constant currency terms on the back of higher-than-expected furloughs in the services business.
This has been lowered from 13.5%- 14.5% indicated post 2QFY23. Ebit margin guidance has been narrowed to 18-18.5% from the previous 18-19%.
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