Hexaware surges post Q4 results, strong guidance

Hexaware Technologies reported fourth quarter earnings in-line with its previously revised forecast, and guided for a "double digit" revenue growth in 2013 with 150-200bps sequential margin expansion in the first quarter, sending its shares surging more than 5 percent on Monday morning.

"With the investments made to strengthen our competencies and expansion of our field force strength in accordance to our strategic plan, we remain confident of delivering double digit revenue growth for the year 2013. Further, with multiple cost levers at hand, we believe operating margin expansion will commence immediately in Q1 2013 and continue going forward. For Q1 2013, on a constant currency basis, we expect operating margin to expand 150-200 bps sequentially," said PR Chandrasekar, CEO and Vice Chairman.

Its revenue in Jan-March is expected to be in USD 94-95 million range, up 1.7-2.8 percent quarter-on-quarter ( estimated USD 1 at Rs 53.52, 1 GBP at USD 1.58 and 1 Euro at USD 1.34), Hexaware said.

In Oct-Dec, Hexaware's consolidated net profit declined 25 percent year-on-year (down 21% sequentially) to Rs 66 crore, while revenue rose 16 percent (down 1.2 percent QoQ) to Rs 502 crore. In Dollar terms, revenue was at USD 92.4 million.

Its EBITDA (earnings before interest, taxes, depreciation and amortization) margin was at 16.9 percent and operating profit (EBIT) margin came in at 15.1 percent, down 480 bps sequentially.

Hexaware had cut its fourth quarter and full year 2012 guidance in December, forecasting Q4 revenue at USD 92 million, to account for changes to a project plan for a customer and impact of hurricane Sandy, which devastated the US east coast in November.

The company added 11 new clients in the fourth quarter, 3 in Americas, 2 in Europe and 6 in Asia Pacific. Americas accounted for 69.2 percent of Hexaware's revenues in the fourth quarter, Europe 23.2 percent and Asia Pacific 7.6 percent.

The average bill rate per hour in Q4 improved sequentially to USD 74.27 for onsite services and to USD 23.16 for offshore locations, it said.

Last quarter, Hexaware's headcount increased by 752 employees year-on-year, down 74 from Q3 to 9,069 employees and attrition dropped 8.7 percent from 13.9 percent in the year ago quarter.

It has forward contracts worth USD 218 million at an average rate of Rs 52.4 and hedges worth Euro 14 million at an average exchange rate of Rs 70.3 maturing over next eight quarters (Jan 2013-Dec 2014).

At the end of Dec 2012, Hexaware had cash and cash equivalents of Rs 447 crore.

At 10:30 hrs, Hexaware shares were at Rs 83.95, up 3.3 percent on NSE.

Emerging Markets: Big Story of 2013?

Nachiket Kelkar
nachiket.kelkar@network18online.com