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IT player, Hexaware guided for good growth in Q4 and is hopeful of meeting its Q4CY11 guidance.
Speaking to CNBC-TV18, PR Chandrasekar, chief executive office and vice chairman, Hexaware said, "Q1 looks quite decent. We will know little bit firmer going into January and beginning of February."
The company added around 1,700-1,800 people last year and is looking to add more employees this quarter.
Meanwhile, Chandrasekar doesn't see much impact on the profitability of the company despite the fall in rupee.
Below is the edited transcript of Chandrasekarís interview with CNBC-TV18. Also watch the accompanying video.
Q: Some of the top sell side brokerages at this point are saying that rupee could deteriorate closer to 58-59 per dollar by this year end. Looking at your current hedge positions, how much of an upside could this give to your rupee earnings and what is the outlook primarily for the next year?
A: With regards to forex movements, we have fairly hedged for the current year, so in that sense it will improve our operating margin provision, since our cost our in rupees out operating margins will go up and will benefit quite materially if it goes up to that level. However, given our hedge there might be negative impact below the line because of the costs since we will have to mark to market. On an overall basis at PAT level there wonít be that much impact but at operating levels our margin will improve.
But for us it doesnít matter because we are hedged in a way where our business is well protected. From an outlook perspective, we had a fairly good run of quarters over the last two years. Since Q2 of 2010 every single quarter, Hexaware has grown in terms of revenue.
Our CQGR over the last eight quarters has been 8% QoQ, so that way we have done well. Our operating margins also have gone up quite significantly. We were at about 5-6% Q3 of this year, 2011; we went up to 17% operating margins. So, that has been a nice run in terms of performance.
Our pipeline looks healthy; we have closed a bunch of fairly large deals over the last 8-9 quarters and we feel reasonably optimistic. We do look over the shoulders; we listen to news and read lot of market sentiment, but business wise things still look pretty good for us.
Q: You donít see any chinks opening up in terms of clients, budget spends, no lower discretionary spends at all what kind of visibility can you give us for the next year?
A: The top 10 customer for Hexaware represent little over 50% of our revenues. So to that extent they are important and given our relationship one can get a pretty good understanding of where it is going. On the whole the outlook is still fairly positive there are some instances where there is some uncertainty. But if I average out our top 10 clients, we still see healthy growth going into 2011.
So, the discretionary spend in terms of some of the major programme as well as some of the maintenance projects continue. When you go beyond that the visibility is lower but not significantly slow. We had guided for some good growth in Q4, we will meet our guidance. Q1 looks quite decent.
We will know little bit firmer going into January and maybe beginning of February. But I am not very concerned. We are continuing to add people, we have added almost 1,700-1,800 people last year, and we will be adding more fresherís this quarter. know what you are saying because the world around seems to be having a different emphasis but for itís aright.
Adding one anecdotal piece, if you live in the US there is a big of a dichotomy it is one of those countries where one can physically feel the environment and how the economy is doing in terms of traffic on the streets, airline business, mall traffic, mood of people and which is not too bad across West Coast, East Coast, most parts of US. Some of the markets and some of the other news make you wonder, so we are cautious, but things still look good for us .
Hexaware Tech stock price
On July 14, 2014, Hexaware Technologies closed at Rs 146.05, down Rs 4.5, or 2.99 percent. The 52-week high of the share was Rs 179.85 and the 52-week low was Rs 97.15.
The company's trailing 12-month (TTM) EPS was at Rs 12.61 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 11.58. The latest book value of the company is Rs 29.59 per share. At current value, the price-to-book value of the company is 4.94.
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