Hexaware drops 3.7% on Macquarie, Nomura downgrade

Software services provider Hexaware Technologies fell as much as 3.7 percent to touch an intraday low of Rs 90.50 on Tuesday as the foreign research firms downgraded the stock after the company cut revenue guidance.

Macquarie downgraded the stock to underperform with a target price of Rs 80 a share. The firm feels the street is underestimating the impact of cyclical pressure on IT spend and related margin fallout. "Potential risks to dividends from depressed earnings could push the stock down further," the firm adds.

Nomura too downgraded the stock to neutral and reduced the target price to Rs 105 from Rs 145.

On last Friday, Hexaware has cut its fourth quarter and full year 2012 guidance citing changes to a project plan for a customer and impact on account of hurricane Sandy, which devastated the US east coast last month. The stock dropped nearly 17 percent in last four sessions.

"Due to certain unforeseen changes to a project plan in a large engagement for a customer, Hexaware now expects the revenues for Q4 to be USD 92 million at the same exchange rates as provided earlier (USD 1 = Rs 53.81). The revised revenue guidance also includes impact of USD 450 thousand on account of hurricane Sandy on the eastern coast of the United States of America," the company said on Friday.

The Portugese investment bank Espirito Santo on Tuesday urged investors "sell" the software services provider's shares, saying it was worried about further margin pressure.

At 14:14 hours IST, the stock declined 2.5 percent to Rs 91.65 on the Bombay Stock Exchange.