IT stocks drop after HCL Tech warns of adverse cross currency impact on its Q3 results

Five IT stocks dropped by 0.23% to 3.92% at 13:30 IST on BSE after HCL Technologies warned of adverse cross currency impact on the company's revenue and EBIT in Q3 March 2015 in pre-quarter earnings update.

HCL Technologies issued pre-quarter earnings update after trading hours yesterday, 31 March 2015.

Meanwhile, the BSE Sensex was up 149.24 points or 0.53% to 28,106.73.

The BSE IT index had outperformed the market over the past one month till 31 March 2015, falling 4.72% compared with 4.78% decline in the Sensex. The index had also outperformed the market in past one quarter, rising 7.75% as against Sensex's 1.67% rise.

Among IT stocks, Infosys (down 2.24%), CMC (down 0.84%), TCS (down 0.28%), and Hexaware Technologies (down 0.23%), edged lower. Wipro (up 0.35%), Tech Mahindra (up 0.72%) and MphasiS (up 2.49%) edged higher.

HCL Technologies dropped after the company in a pre-quarter earnings update issued after market hours yesterday, 31 March 2015, said that the company's revenues and EBIT in Q3 March 2015 to be reported in US dollar would have adverse impact of about 280 basis points (bps) and 80 bps respectively in Q3 March 2015 as dollar continued to strengthen against almost all global currencies during the quarter ended 31 March 2015. The stock was off 3.92% at Rs 941.70. In spite of the adverse impact of exchange rate movement, the company is confident of achieving EBIT in the range of about 21 to 22% in Q3 March 2015, HCL Technologies said.

HCL Technologies expects to post foreign exchange loss of about $5.5 million in Q3 March 2015, 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, HCL Technologies said. The treasury income (net) for the quarter is expected to be around $32 million being the same level as reported in the previous quarter, HCL Technologies said.

The company expects effective tax rate for the year ending 30 June 2015 to be in the previously guided range of 21% to 22%.

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