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HDFC Securities Institutional Equities
HCL Tech Ltd. – HCL Tech posted better-than-estimated growth and a slightly higher margin in Q2 FY23. Revenue growth, at 3.8% QoQ constant currency and 15.8% YoY CC, is tracking better than last year’s, led by 5% plus sequential growth in both IT and business services as well as engineering research and development segments. Q2 revenue outperformance and H2 visibility syncs with upgrade in revenue guidance to 13.5-14.5% CC for FY23E (versus 12-14% earlier), including services (excluding products and platform) growth guidance of 16-17% CC.
Wipro Ltd. – Wipro’s revenue growth came in line with consensus while margin was slightly lower (adjusted for Europe restructuring cost) in Q2 FY23. Revenue growth of 4.1% QoQ CC was at the mid-point of 3 to 5% guided band (including ~1.5% inorganic). Guidance for Q3 was a tad lower than expected at 0.5% to 2% sequentially. Incremental downside risks are higher in the technology vertical (12% of revenue) and in banking, financial services and insurance consulting/Capco (~9% of revenue).
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