HCL Technologies says Oct-Dec revenue to get hit by strong dollar

HCL Technologies, India's fourth largest software services company, has said its revenues for the October-December quarter might get adversely impacted due to strengthening of US dollar against various global currencies.

In a pre-quarter earnings briefing to investors and analysts, HCL Tech on Tuesday said during this quarter, US dollar continued to strengthen against almost all global currencies like British Pound, Euro and Australian dollar.

"Since the company's revenues are derived in multiple currencies, the revenues for the quarter to be reported in US Dollar would have adverse impact of about 210 basis points (bps) on account of strengthening of US Dollar against various global currencies," the company said.

This impact has been computed using the exchange rate as on December 18, 2014, HCL Tech added.

The company's scrip closed at Rs 1,536.10 apiece, lower by 3.2 per cent from the previous close on the Bombay Stock Exchange.

For the previous July-September quarter, HCL Tech posted 1.9 per cent quarter on quarter growth in US dollar terms after taking into account the adverse impact of 130 bps on account of movement in various currencies.

At the beginning of the ongoing quarter, HCL Tech had estimated foreign exchange loss of $2.5 million on account of cash flow hedges based on exchange rates prevailing as on September 2014-end. However, taking into account the exchange rate as on December 18, 2014, the company now expects to post foreign exchange gain of about $2 million, covering the impact of both cash flow hedges and mark-to-market of the foreign currency assets and liabilities.

"This foreign exchange gain or loss would continue to be reported after EBIT," it said.

The IT company added that the actual numbers would vary (since this is interim information) depending upon the exchange rates during remaining period of quarter.

For the quarter ended September 30, 2014, HCL Technologies had reported treasury income of $33.4 million. The treasury income is likely to be lower by about 5 per cent in October-December 2014 quarter. The company expects effective tax rate to be in the guided range of 21-22 per cent.