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Hexaware down 9% post Q2 nos; Macquarie downgrades to neutral, raises target price

Credit Suisse has maintained underperform rating on Hexaware and raised target to Rs 380 from Rs 360 per share.

July 25, 2018 / 12:05 PM IST
 
 
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Shares of Hexaware Technologies plunged nearly 9 percent intraday Wednesday despite company reported better numbers in the quarter ended June 2018 (Q2FY19).

The company's second quarter (April-June) consolidated net profit rose 14.4 percent at Rs 153.6 crore against Rs 134.3 crore in the quarter ended March 2018.

Revenue of the company was up 8.4 percent at Rs 1,136.7 crore against Rs 1,049 crore. Also, dollar revenue rose 3.8 percent at USD 168.3 million.

Its operating profit rose 7.9 percent at Rs 159.1 crore and margin was at 14 percent.

The company has declared payment of interim dividend at Rs 2.50 per share (125 percent) on equity shares of Rs 2 each. The interim dividend on equity shares as declared in the board meeting on July 24, 2018 shall be paid on August 08, 2018.

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Macquarie has downgraded Hexaware Technologies to neutral from buy on the basis of valuations. But it has raised target to Rs 500 from Rs 476 per share.

The company's Q2CY18 revenue broadly is in line, while margins is lower than estimates, said Macquarie.

The research house has raised guidance to 12-13 percent from 10-12 percent for CY18 and also raised EPS estimates by 2-5% largely led by currency movement.

Credit Suisse has maintained underperform rating on Hexaware and raised target to Rs 380 from Rs 360 per share.

According to Credit Suisse, the revenue growth remains solid and ahead of estimates, while margins has disappointed for second consecutive quarter.

The valuations are very high, given its high client concentration. The research house cut EPS estimates on lower margin estimates.

The negatives include, high client concentration, lop-sided nature of growth and margin concerns, it added.

At 11:45 hrs Hexaware Technologies was quoting at Rs 455.45, down Rs 41.05, or 8.27 percent on the BSE.

Posted by Rakesh Patil
Moneycontrol News
first published: Jul 25, 2018 12:00 pm

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