HCL Technologies has provided a warning of tepid revenue growth for the September quarter, impacted largely by the depreciation of multiple currencies against the US dollar and a strong likelihood of a disengagement in a multi-million dollar contract.
In a notice to the Bombay Stock Exchange, HCL stated that revenues to be reported in US dollar would have an adverse impact of 80 bps on account of depreciation of multiple currencies against USD. The rising US dollar has sparked certain concerns for the Indian IT industry which today is a well diversified unit deriving revenues in Euro, British Pound, Yen and Australian Dollar.
Besides the currency impact, the other factors contributing to this projected tepid revenue growth for HCL Technologies are client specific issues and challenges from its second largest revenue generating vertical – infrastructure services. HCL stated that in one of the multi-million multi-year custom application development projects being executed for one of the customers in the public services vertical certain differences have arisen with reference to programme objectives.
“While discussions are on with the customer and we are in the process of disengagement, as a matter of prudence the company is considering reserving up to $20 million this quarter,” it said.
On the challenges in the infrastructure services segment, which accounted for 35.3% of its revenues at the end of June quarter, HCL Technologies has said that there was some “skewness in revenue growth due to transition timelines for complex engagements particularly in infrastructure services.”
The revenue from infrastructure services segment for HCL Technologies has exceeded $2 billion on a full year basis. HCL Technologies for the quarter ending June, 2015 reported a revenue of $1538 million with a sequential growth of 3.2%. The net profit during this period was $279 million recording a growth of 3.1%.