Buy Hexaware Technologies; target of Rs 315: HDFC Securities

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26 Aug, 2025 12:21

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Hexaware posted in-line revenue, while operating  performance  came in stronger  than estimates. Revenue came in at USD 154mn, 0.9% QoQ (USD 153mn est.), on  0.4%  CC. EBITDA% came in at 17.4%, (+120bps QoQ), supported by lower  ESOP  cost  (+41bps  QoQ  impact)  and  absence of visa cost (+65bps impact).  APAT was higher at Rs 1.42bn, supported by lower ETR and higher forex gain (Combined impact of Rs 100mn sequentially on profit). Revenue guidance for CY17E was increased marginally to the ‘upper-end’ of the 14 to 15% band from 14 to 15% earlier. EBITDA% guidance was increased to 16.5 to 17.5% from ~16.4% earlier. We maintain our positive outlook on Hexaware, based on, (1) Growth leadership in IMS/BPM (automation-led), (2) Strong  account  mining  strategy  (Top  6  to  10  and Non-top-10 acs grew 9.7/5.8%  QoQ),  (3) Revival in enterprise solutions going ahead, supported by  leadership  focus  and product diversification, (4) Strong net-new deal wins  with TTM TCV of USD 161mn, 36% growth over the prior period (USD 41mn TCV in 3QCY17).

We expect rev/EPS growth of 13/16% over CY16-19E, factoring in rev growth at 15/9.9/13% for CY17/18/19E. EBITDA% est. stood at 16.6/17.6/18.4 for the same  period. Hexaware’s valuations are supported by its growth premium and operational resilience  within  the sector. Maintain BUY with a TP of 315, 15x Sep-19E EPS.

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