HCLTech Guidance: Noida-based IT major tweaks projection, pegs service revenue growth at 4-5%

HCLTech Guidance: Noida-headquartered HCLTech — the country’s third-largest IT firm by market capitalisation (mcap) — on Monday tweaked its revenue growth guidance for the current financial year. HCLTech now expects its services revenue growth to stand between 4.0 per cent and 5.0 per cent for the year ending March 31, which translates to an increase of 100 basis points in the lower end of its earlier projection. 

This project growth is in constant currency (CC) terms — or revenue after removing any possible forex rate implications.    

The IT major left its overall revenue growth and EBIT margin projections unchanged. 

It expects its earnings before interest and taxes (EBIT) margin — a key measure of profitability — in the range of 17.0-18.0 per cent and company revenue growth to the tune of 3.0-5.0 per cent for FY26, according to a regulatory filing.

Earlier on Monday, the HCLTech stock ended 0.1 per cent lower at Rs 1,494 apiece on BSE in a Mumbai market that halted two back-to-back sessions of gains.

HCLTech results

 The IT firm reported a consolidated net profit of Rs 4,235 crore for the quarter ended September 30, translating to a quarter-on-quarter increase of 10.2 per cent that was almost in line with analysts’ estimates.

Its revenue increased 5.2 per cent sequentially to Rs 31,942 crore.

According to Zee Business research, HCLTech was estimated to register a net profit of Rs 4,292 crore with revenue of Rs 31,942 crore for the fiscal second quarter.

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Here are answers to a few commonly asked questions about guidance: 

What is guidance? 

Guidance refers to a management’s estimate of future growth. Typically, companies release these projections for the coming quarters or the financial year, covering areas such as revenue growth and margin expansion.

What does it tell investors?

Guidance informs shareholders about what a company thinks about its growth in the coming months.

This is why guidance serves as an important metric for investors. 

Which company must give guidance?

There is no regulatory requirement to give guidance.

Companies that typically give guidance are those whose earnings visibilty depends, to a large extent, on foreign deal wins and global demand trends. 

For instance, Indian IT companies that release these projections lay out their estimates in constant currency terms — these are numbers adjusted to filter out the impact of forex changes. 

Why do investors track these estimates closely?

Guidance reveals a great deal about a management’s outlook. Typically, investors reward accurate assumptions as it gives shareholders the confidence that a company knows and is watchful of the prevalent market dynamics.

These projections also alert investors about forthcoming changes in demand, which allows them to adjust their strategies accordingly.     

Investors especially watch out for these numbers for signs of headwinds or tailwinds in the respective sector. 

Guidance numbers from IT companies — which earn the lion’s share of their revenue from foreign markets — are tracked for clarity on global demand trends, particularly in the US and Europe.

Analysts use these numbers to estimate future profits, and adjust their valuations accordingly.