Eyeing acquisitions targets in banking, healthcare: Hexaware

Business process outsourcing company Hexaware Technologies has reduced its dividend per share to Rs 1 in the second quarter from Rs 2.5 in the first quarter. The company has reached a certain level of stability where it wants to look for possible acquisitions, says R Srikrishna, Chief Executive Officer, Hexaware Technologies. So the company wants to retain some capital. The two possible areas where Hexaware plans to invest are in healthcare and banking.The company performed poorly in the first quarter, but Srikrishna is hopeful of a robust performance in the coming quarters.Below is the verbatim transcript of R Srikrishna's interview to Reema Tendulkar on CNBC-TV18.Q: Can you decode your company's results for us?A: We expect our second half to be robust and we said that even when we had a bad Q1. We have said that we expect the rest of the quarters to be robust and we still expect that.Q: You need about 6 percent quarterly revenue growth in Q3 and Q4 to hit a double digit revenue growth. Is it going to be that robust? Give us a sense of what full year is going to look like in numbers?A: What we have always said is how we will perform relative to the industry. So we expect to perform at the top of the pack or near the top of the pack and we still expect to do that.Q: NASSCOM industry growth average is 10-12 percent in constant currency, you are saying for the full year you should be closer to the top end, closer to 12 percent?A: We will see where it ends up, that was the projection at the beginning of the year.Q: So what is your projection of how the industry growth rate might come up because we have seen many disappointing earnings to start the year?A: Given what we have seen so far, I will be surprised if it hits that kind of a guidance, it didn’t last year either.Q: Is double digit likely for the industry according to you?A: Unlikely.Q: What about CY16 margins? When we last spoke to you, you indicated that margins to this year should be similar to what we saw in the prior year, do you still maintain that?A: That is what we are still working towards.Q: that is what is realistically, it is not just an aspiration?A: We have caught up.Q: There is no wage hike here?A: The wage hike is going to come in Q3, it will have a partial impact and Q4 will have full impact.Q: What about the dividend cut, Rs 2.5 in Q1, you have brought it down to Re 1 per share in Q2, is there a change in the dividend policy?A: We are at a stage in our growth where two things are true that first our organisation has reached stability where we feel good about looking at possible acquisitions seriously and we are seeing a target rich environment right now.So there is a little bit of capital that we want to preserve in the company for a strict evaluate acquisition seriously.Q: Anything that you have outlined?A: We have identified the specifics of the verticals under service lines that we want to present in.Q: Those are?A: Heavily in healthcare and banking. Again within healthcare we have defined some narrower segments but at the high levels it is in these two segments.Q: So it is quite likely that till we see that acquisition and its integration that the dividends could come down from here compared to what we have seen?A: We want to strike the balance in rewarding shareholders on a quarterly basis. So we don’t expect people reduce it down from this point.Q: Any particular verticals or geographies that you like to call out in terms of caution?A: Brexit, there is a little bit of -- potentially the initial assessment is that UK Financial Services companies would have more of a pause on many fronts. So fortunately for us, pound is only 5 percent of the revenue but the one segment where there could be some pause or postponement of spenders in UK financial services.