Accumulate Hexaware Technologies; target of Rs 430: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Hexaware Technologies

Hexaware results were below our estimates on USD revenues. Albeit, EBIDTA margin was above our estimates. PAT for the quarter was 4% above our estimates aided by higher forex gains. Revenues for 3QCY18 came at USD171.1mn up 1.7% QoQ and 11.1% YoY and below our estimates (PLe: USD174.2mn). Constant currency growth for the quarter stood at 2.1% QoQ. Management cited that unanticipated furloughs, delayed transition and ramp up in select deals and Supply side issues for talent in North America have led to revenue miss. Revenues from Top 5 accounts grew by a modest 0.9% QoQ and contributed to 42% of total revenues. Hexaware expects growth momentum to pick up from 4QCY18 onwards and remains confident on outlook for CY19E. However, owing to tepid 3QCY18, Hexaware has lowered USD revenue growth guidance for CY18 to 11-12% (vs 12-13% earlier). Achieving this would require 1-4% QoQ growth for 4QCY18 for meeting the lower and upper end respectively. TCV of deals won in the quarter stood at USD25mn in the quarter (vs USD43mn for 3QCY18).

Outlook

Hexaware trades at 14.4x June 20E EPS. Trim TP by 10% to Rs430/sh (17.5x June 20E EPS vs 19x earlier). We upgrade our ratings Accumulate (vs Hold earlier).

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