HCL Tech Says Strong Dollar to Hurt Q2 Revenues

New Delhi: HCL Technologies, India's fourth largest software services firm, on Tuesday said its revenues for the October-December quarter might get adversely impacted due to the strength of US dollar against various global currencies.

In a pre-quarter earnings briefing to investors and analysts, HCL said during this quarter, the 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 on account of strengthening of US Dollar against various global currencies," it said.

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

Shares in HCL Tech, on Tuesday, ended at Rs 1,536.10 apiece on the BSE, down 3.2 per cent from the previous close.

For the previous July-September quarter, the company posted quarter on quarter growth of 1.9 per cent 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 Technologies 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.

It also said 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 a 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.