Hold Hexaware Technologies; target of Rs 227: Edelweiss

Edelweiss' research report on Hexaware Technologies
Hexaware Technologies’ (Hexaware) Q2CY17 revenue, at USD152.6mn, grew 5.4% QoQ (up 4.9% CC) and surpassed Street’s 3.7% growth forecast. EBITDA margin (net of ESOP costs) fell 70bps QoQ to 16.2% and was below Street’s 16.6% estimate. Post a robust Q2CY17, Hexaware increased CY17 revenue and EBITDA growth guidance to 14‐15% (from 10‐12%), despite anticipated ramp down due to in‐sourcing and loss of a portion of business from a Top‐5 client.

Outlook

We believe current valuations, at 15.0x CY18E EPS, leaves limited upside. Hence, we maintain ‘HOLD/SP’ with a revised target price of INR227 (INR212 earlier) based on 13x CY18E EPS.

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