Hexaware Technologies Ltd. share price target

We upgrade to BUY, with a TP of Rs 290, 15x Sep-19E. Hexaware posted robust 2Q numbers, with revenue at USD 152.6mn (USD 149.4mn est.) on 4.9% CC QoQ growth (6.4% volume and -1.5% realisations). EBITDA% came in-line at 16.2% (16.1% est.), -64bps QoQ, supported by an increase in utilisation (+190bps QoQ to 80.8%) and mitigated by the negative impact of higher ESOP and visa costs, INR appreciation and lower bill-rates for 2Q. APAT came in at Rs1.22bn, supported by forex gain of Rs 138mn (Rs16.2mn in 1Q).

Impressive Revenue, Higher Guidance Mask Near-Term Weakness Hexaware Technologies (Hexaware) delivered a strong performance in 2QCY17 primarily led by BFS vertical. USD revenue grew by a robust 5.4% QoQ to US$152.6mn (2.7% above our estimate) on the back of a strong 6.4% QoQ growth in volume. Vertical-wise, strong growth was recorded in the key BFS vertical (+7.1% QoQ), followed by Insurance & Healthcare (5% QoQ). Utilisation stood at the highest-ever level (80.8%) led by increasing focus on automation. However, EBIT margin (ex-ESOP) remained flattish at 15.9% despite strong revenue growth, as INR appreciation (42bps), higher visa cost (50bps) and lower billing rate (91bps) nullified the...

Unique capabilities of Asset Management and Asset Servicing, Increasing acceptance of its Shrink IT Grow Digital strategy, Focus on automation, next-gen services, associated partnerships

Revenue increased by 2.09% to Rs. 960.53 Cr in Q1CY17 when compared to the previous quarter. Also it grew by 17.11% when compared with Q1CY16.

Outlook intact:The management expects CY17 revenue growth to be in double digits (10-12%) with Q2CY17 also to post strong momentum. H2CY17 to absorb the impact of in sourcing by one of the Top 5 clients (growth impact to be ~1-1.5%).

Revenue stood at USD 144.7mn, 4.2% QoQ on a 4% CC growth (A 4.3% volume growth and a 0.3% decline in realisations). The EBITDA% at 16.9%, -36bps QoQ, was impacted by a ramp-up of costs for a new BPO client (-41bps impact).

Hexawares 1Q performance was marked by strong IMS-led growth (onsite heavy). However, margins (in line) were impacted by deal transition costs and lower realisations. The company maintained its revenue guidance of a USD revenue growth of 10-12% for CY17E, as well as a margin guidance of CY16 EBITDA%.

Hexaware Technologies (Hexaware) recorded a strong performance in 1QCY17 led by focus on niche sub-verticals like Travel and Capital Markets. USD revenue grew 4.2% QoQ in 1QCY17 (4% in CC terms) to $144.7mn (3.1% above estimate) mainly on strong volume growth of 3.8% QoQ. Vertical-wise, strong growth was recorded in the Travel & Transportation vertical (+7.5% QoQ). BFSI clocked a healthy 5.6% QoQ growth, while Manufacturing saw 3.3% QoQ growth. Conversely, Insurance & Healthcare clocked a 0.9% QoQ fall. Thus, ~84% of Hexaware's revenue saw strong traction. Utilisation stood at its highest-ever level (78.9%) led by increasing focus on automation. However, EBIT margin (ex-ESOP) declined 54bps QoQ, despite strong revenue...

Revenue increased by 4.06% to Rs. 940.87 Cr in Q3FY17 when compared to the previous quarter. Also, it increased by 14.81% when compared with Q3FY16.

Hexaware is a mid-cap IT company & a leading global provider of application development & maintenance (36.4%), enterprise services (12.7%), testing (20.9%), business intelligence & analytics (14.1%), BPO (6.8%) and Remote infrastructure management services (9.1%). The total headcount stands at 12,155 while the number of active clients stood at 231. The company's geographical revenue break-up is as follows; America (82.5%), Europe (11.1%) and ROW (6.4%). Company's...