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Street expects growth to rebound

Information technology (IT) company HCL Technologies is expected to release its figures for the second quarter of fiscal year 2021-2022 on Thursday, October 14, after market hours. The Street expects the company’s growth to rebound this quarter.

As the company is headquartered in the NCR region, growth was moderate as HCL experienced execution and execution issues during the last quarter. This time, growth is around 4% quarter-on-quarter and an improvement over the 0.9% growth HCL had in the previous quarter. Margins are expected to be slightly below 19.35% and earnings will be absolutely stable.

Morgan Stanley expects the company to see 10-12% revenue growth, while Kotak expects the company to even reach 12% plus type of growth. The direction of the margin should be maintained between 19 and 21%.

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In the case of TCS, the gains from transactions are moderate. But for HCL, the number of deals the company is announcing this quarter is pretty high. Nine deals have been announced in the past three quarters. According to management tTransaction activity has been strong. The deal pipeline hits an all-time high when CNBC-TV18 discussed with them three months ago.

The stock is now trading at reasonable valuations relative to its peers. So, HCL Tech is trading at 26x while all of its peers are over 30x in terms of their FY22 PE.

First publication: STI