Accumulate Hexaware Tech; target of Rs 100: Emkay

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Accumulate Hexaware Tech; target of Rs 100: Emkay

Emkay Global Financial Services is bullish on Hexaware Tech and has recommended accumulate rating on the stock with a target of Rs 100 in its October 20, 2011 research report.

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RELATED NEWS Accumulate Chambal Fert; target of Rs 98: Emkay Accumulate SIB; target of Rs 24: Angel Broking Accumulate Persistent; target of Rs 381: Unicon Investment ALSO READ See previous views by Emkay Global Financial Services See what other Experts & Brokerages are saying about Hexaware Tech See messages about Hexaware Tech Hexaware Tech BSE | NSE 30/05/12 Are Mutual Funds betting on Hexaware Tech?

Emkay Global Financial Services is bullish on Hexaware Tech and has recommended accumulate rating on the stock with a target of Rs 100 in its October 20, 2011 research report.

"While Hexaware's revenues at US$ 78.8 mn(+5.3% QoQ,+29% YoY) were in line with estimates, margins improved impressively by ~340 bps QoQ to 18.7% driving the significant profit beat. We note that margin improvement was aided by strong revenue growth (9.2% QoQ volume growth with offshore % of business improving by ~300 bps sequentially to 46.3%), weak currency (which helped improve margins by ~150 bps) and growth led SG&A leverage. Growth continued to be led by top clients with top 1/5/10 clients growing by ~15%/5%/7% sequentially with no of US$ 20 mn+ clients increasing to 3 (V/s 2 earlier).Headcount additions was strong for the 2nd quarter in a row with total HC increasing by ~10% sequentially."

"A pretty decent 4-4.7% sequential revenue growth guidance for Dec'11marks the continuation of a strong CY11 for Hexaware with co expected to record a 32%+ YoY revenue growth. Despite the macro uncertainty, co remains optimistic about revenue growth in CY12 (aided by visibility on ramp ups on some of the large deals won by the company over the past few quarters) and a healthy deal pipeline( company has indicated that it is actively pursuing 4 large deals with TCV of US$ 25 mn+ currently). Strong employee additions in the past 2 quarters along with an indication to hire a larger number of freshers in CY12 lend confidence to deal pipeline/ramp ups."

"Hexaware's Sep'11 performance vindicates our positive thesis on the stock (note that we have continued to raise estimates through the past 3 quarters) of superlative operational performance aided by strong revenue growth and addressing of inherent operational inefficiencies. We raise our US$ revenue estimates marginally as well as increase our CY11/12 margin assumptions to 16.9%/17.5% (V/s 14.9%/14.3% earlier, aided by a lower currency reset as well) driving a 11%/17% raise in our earnings estimates to Rs 8.3/8.7. Retain ACCUMULATE with a revised TP of Rs 100. (V/s Rs 80 earlier)," says Emkay Global Financial Services research report.

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