Buy Hexaware Tech; target of Rs 125: PINC Research

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Buy Hexaware Tech; target of Rs 125: PINC Research

PINC Research is bullish on Hexaware Tech and has recommended buy rating on the stock with a target of Rs 125 in its February 6, 2012 research report.

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RELATED NEWS Buy Ashoka Buildcon; target of Rs 245: Angel Broking Accumulate United Phos; target of Rs 175: P Lilladher Accumulate NTPC; target of Rs 175: Prabhudas Lilladher ALSO READ See previous views by PINC Research See what other Experts & Brokerages are saying about Hexaware Tech See messages about Hexaware Tech Hexaware Tech BSE | NSE 31/05/12 Are Mutual Funds betting on Hexaware Tech?

PINC Research is bullish on Hexaware Tech and has recommended buy rating on the stock with a target of Rs 125 in its February 6, 2012 research report.

"Hexaware Tech, large deals won during the last 4-5 quarters are from the top customers. In line with Hexaware's focus on account mining, the company has been cross selling end to end business solutions to its key clients. For 2012, ramp up in large deals provide visibility on revenue growth. However, we believe the S&M expenses will increase as the management looks beyond top 20 clients for future growth."

"As a strategy, Hexaware wants to focus on selected service lines where they have expertise like ERP (PeopleSoft), Testing, BI & Analytics. Emerging service line of IMS was launched in 2009 and now contributes 4% of revenue. The management has guided for 6% revenue contribution from IMS in 2012. The large deal of USD25mn won in 2011 has started to ramp up. PeopleSoft's new version 9.2 is likely to be launched in 2013 which will provide opportunities in case of upgrades. Out of the 6 large deals won in last 4-5 quarters, 3 were from US (USD177mn deal won in July 2011, USD110mn won in July 2010 & annuity deal for USD10-15mn in April 2011). Most of the projects have started ramping up. The largest deal won to date worth USD250mn has started ramping up in Jan 2012."

"Hexaware aspires to achieve USD1bn revenues by leveraging the recent transformations and key client relationships. By CY2013-14, the company expects to have an annual revenue run rate of USD500mn. For the near term, company has guided for 20%YoY revenue growth for CY12 and EBITDA margin of Q4 (23%) at constant currency. However, due to rupee appreciation from Q4 levels and expectation of increase in S&M expenses, we believe they will likely fall short in margin. But the sustained growth momentum and healthy deal pipeline, provides confidence of robust performance going ahead. We maintain 'BUY' rating on the stock, with a target price of Rs 125 based on 12x CY12E EPS," says PINC Research report.  

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