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HCL Tech Ltd. in Q2 FY23 delivered constant currency QoQ revenue growth of 3.8% (15.8% YoY), a tad below our 4% estimate, but due to higher cross-currency headwinds than estimated, U.S. dollar revenue grew by just 1.9% QoQ (versus our estimate of 2.8%).
Ebit margin expanded by ~90 basis points QoQ, broadly in line with our estimate and was entirely driven by services margin expansion (aided by engineering research and development, services and solutions margin expansion of ~300 bps); helped largely by realisation improvement, currency gains and selling, general and administrative leverage.
Overall YoY HCL Tech’s CC revenue growth guidance was upped from 12-14% to 13.5-14.5%, with services now likely to grow by 16-17% and products and platform likely flattish (excluding divestments). Ebit margin guidance was tightened from 18-20% to 18-19%.
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