Hexaware Technologies Ltd. share price target

Despite weak seasonality, Q4CY16 performance beat our expectations. Net volume growth (~3% QoQ after accounting for furloughs/ lower calendar days) driven by momentum in key verticals of BFS (42% of revenue), Healthcare & Insurance (16% of revenue). Despite headwinds from weak seasonality and salary..

Hexaware delivered largely in line with estimates in 4QCY16, supported by higher offshore and non top-10 accounts? growth. The company guided for 10-12% CC growth for CY17E and EBITDA% similar to CY16 margin. We believe that scope for margin expansion is limited, based on continuity in onsite-led growth ahead as well as reversion of utilisation to lower levels.

Solid Quarter, Deal Wins Strong; Client-Specific Issue A Negative Hexaware recorded solid performance in 4QCY16 with USD revenue up 2.7% QoQ (3.4% in CC terms) to $138.9mn (above our estimate by 1.7%). Insurance & Healthcare (+5.5% QoQ), Manufacturing (+4.1%) and BFS (+3.9%) recorded strong growth, while Travel & Transportation saw 6.4% QoQ decline. Hence, ~87% of revenue saw robust traction. However, despite strong revenue growth and all-time high utilisation (78.6%), 30bps QoQ decline in EBIT margin is disappointing. Net profit rose 9% QoQ, above our estimate by 5.5% led by other income. Deal wins from new clients is a key positive,...

Hexaware is a mid-cap IT company & a leading global provider of application development & maintenance (37.0%), enterprise services (12.0%), testing (20.0%), business intelligence & analytics (15.0%), BPO (7.0%) and Remote infrastructure management services (8.0%). The total headcount stands at 11,859 while the number of active clients stood at 231. The company's geographical revenue break-up is as follows; America (80.9.0%), Europe (12.5%) and ROW (6.6%). Company's...

Hexaware posted inline revenue and beat on margins with top accounts/utilizations driving growth/margin in 3Q. While growth is expected to remain steady supported by IMS/BPM within services and BFS/healthcare and insurance among verticals, annual margins are unlikely to breach CY15-levels in the medium-term.

Impressive all-round performance, buy back a positive Hexaware Technologies' USD revenue grew by strong 4.3% qoq in 3QCY16 to US$135.2mn. EBIT margin expansion by 214bps qoq (ex-ESOP compensation cost) led by lower visa cost and higher utilisation is a key positive. Utilisation is at its highest level since 4QCY13 (74.1%). Higher margins led to 11.9% qoq growth in net profit. Deal wins from new clients grew healthily by 110% qoq to US$42mn. Share buyback is another positive development. Hexaware is buying back up to 5.69mn shares at a price of Rs240 per share, amounting to Rs1.37bn. Assuming full...

Hexaware is a mid-cap IT company & a leading global provider of application development & maintenance (37.0%), enterprise services (13.0%), testing (20.0%), business intelligence & analytics (16.0%), BPO (7.0%) and Remote infrastructure management services (8.0%). The total headcount stands at 11,875 while the number of active clients stood at 231. The company's geographical revenue break-up is as follows; America (80.9.0%), Europe (12.5%) and ROW (6.6%). Company's...

Hexaware posted a mixed quarter with a slightly higher-than-anticipated revenue growth, negated by tad lower margins in 2Q (higher SG&A). While the positive takeaway is better growth commentary around top accounts and increased profitability focus, it seems insufficient to move the margin hurdle significantly (we now think the aggressive margin outlook is unlikely to be met).

Encouraging revival in revenue growth: Hexaware Technologies' (HEXW) 6.3% QoQ CC growth in revenue marked a sharp rebound, after two quarters of revenue decline. Growth in top 10 clients revived as they contributed 66% of incremental growth in 1HCY16 v/s -6% in 2HCY15. Onsite growth of 7.9% QoQ reflected the ramp-up of new deals and top accounts. Deal signings at USD20m...