HCL Tech slips as cross currency movement to adversely impact Q3 results

HCL Technologies fell 3.30% to Rs 947.30 at 10:21 IST on BSE after the company in pre-quarter earnings brief to investors highlighted headwinds due to currency movement on revenue and operating margin.

The company issued the statement after market hours yesterday, 31 March 2015.

Meanwhile, the BSE Sensex was up 20.39 points, or 0.07%, to 27,977.88.

On BSE, so far 54,000 shares were traded in the counter, compared with an average volume of 2.16 lakh shares in the past one quarter.

The stock hit a high of Rs 963.20 and a low of Rs 935 so far during the day. The stock hit a record week high of Rs 1,058.20 on 11 March 2015. The stock hit a 52-week low of Rs 628.50 on 19 May 2014.

The stock had outperformed the market over the past one month till 31 March 2015, falling 3.03% compared with 4.78% decline in the Sensex. The scrip had also outperformed the market in past one quarter, rising 22.77% as against Sensex's 1.67% rise.

The large-cap company has an equity capital of Rs 281.14 crore. Face value per share is Rs 2.

HCL Technologies in its pre-earnings brief, highlighted that during the January-March 2015 quarter, US dollar continued to strengthen against almost all global currencies. Since the company's revenues are derived in multiple currencies and significant costs are incurred in Indian Rupee (INR), the revenues and earnings before interest and taxes (EBIT) for the quarter to be reported in US Dollar would have adverse impact of approximately 280 basis points (bps) and 80 bps respectively. In spite of the adverse impact of exchange rate movement, the company is confident of achieving EBIT in the range of 21-22% in January-March 2015 quarter.

The company said it expects to post foreign exchange loss of approximately $5.5 million covering 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 below EBIT. The treasury income (net) for the quarter is expected to be around $32 million being the same level as reported in the previous quarter.

Further, the company said it expects effective tax rate for the year to be in the guided range of 21% to 22%. The above is interim information (calculated using exchange rates as of 27 March 2015), the company said.

HCL Technologies' consolidated net profit rose 2.3% to Rs 1915 crore on 6.3% growth in revenue to Rs 9283 crore in Q2 December 2014 over Q1 September 2014.

HCL Technologies is a leading global IT services company working with clients in the areas that impact and redefine the core of their businesses.

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