HCL Technologies is expected to release its Q2FY20 earnings report on Wednesday. The street expects a constant currency growth of about 6.3-6.4 percent. In dollar terms, revenue growth will stand at 5.5 percent sequentially.
HCL's numbers will look a lot better than its peers because the company has integrated the IBM acquisition or intellectual property (IP) deals that it took over from the American giant.
Topline growth is likely to drive a strong rupee revenue growth, which is expected to be about 6.8 percent.
Margins are expected to expand sequentially by 150 basis points (bps) as they were depressed in the previous quarter due to the company accounting for expenses related to the IBM integration but not the revenues accrued.
Additionally, there are no visa costs in Q2 unlike in Q1. Also, the IBM revenues which will come on board this quarter have higher margins of around 30 percent. These factors suggest a strong profit growth of 14 percent.
HCL's FY20 guidance will be closely watched. Currently, the company has guided for FY20 constant currency revenue growth of 14-16 percent, and street expectation is that it is not going to be tweaked — the management is likely to hold on to this guidance but if it is upped — because there is a case for organic growth to be better than what the company had earlier guided for — then it will be seen as a big positive.