Hexaware Technologies Ltd. share price target

Hexaware is a mid-cap IT company & a leading global provider of application development & maintenance (38.0%), enterprise services (14.0%), testing (20.0%), business intelligence & analytics (15.0%), BPO (6.0%) and Remote infrastructure management services (7.0%). The total headcount stands at 11,599 while the number of active clients stood at 229. The company's geographical revenue break-up is as follows; America (82.0%), Europe (13.0%) and ROW (5.0%). Company's...

Hexaware Technologies posted revenue and margins below our estimates, which was attributed to slip in a few big accounts during the quarter. While its revenue growth is expected to recover going forward, based on continuity in strong wins and potency in BFS & Healthcare & Insurance verticals, we moderate the extent of our optimism. JFM quarter was marked by NorthAm-led growth, homogeneous decline across service-lines and US$36mn TCV wins (US$120mn in CY15). Though we moderate our earnings estimate, we continue to maintain our BUY...

We met Hexawares CFO Rajesh Kanani for a business update and come away enthused about CY16 growth prospects. The management is not seeing any softness in demand and is positive about beating NASSCOM?s 10-12% growth estimate, along with stable margins.

Hexaware is a mid-cap IT company (CY15 revenues - USD 31.23bn) & a leading global provider of application development & maintenance (38.1%), enterprise services (14.3%), testing (20.6%), business intelligence & analytics (14.0%), BPO (5.7%) and Remote infrastructure management services (7.3%). The total headcount stands at 11,375 while the number of active clients stood at 243. The company's geographical revenue break-up is as follows; America (81.3%), Europe (13.1%)...

Hexaware's revenue performance was way below our as well as consensus estimates. Various factors like soft calendar, higher furloughs and Chennai floods impacted revenue growth in this quarter, resulting in USD revenue de-growth of 0.8% QoQ at $124.1mn.

One-time cost impacted margin; Trajectory to improve EBITDA% stood at 15.9%, -195bp qoq on the impact of 1) higher gross margin by -180bp (calendar -106bp, higher onsite utilization +60bp, onsite increments -70bp, bonus provision -32bp, higher onsite-mix -27bp), 2) Chennai flood impact -70bp, 3) one-time consultancy cost -20bp and 4) higher CSR expense. We expect margins to rebound in 1QCY16E with absence of one-time cost incurred in 4Q. Management has provided an outlook of CY16E EBITDA% at the level of CY15; we've factored...

Hexaware Technologies (HTL) recorded a 3.1% QoQ revenue growth in 3QCY15 to US $125.1mn. It was heartening to see healthy growth in key focus verticals of BFS ( 5.6%) and insurance and health care ( 7.8%). EBIT margins ex-ESOP charge expanded 105bps QoQ aided by INR depreciation and operational efficiency.

Hexaware's revenue performance was in-line with our estimates. Despite the decline in its top client by 6.5% QoQ, USD revenue grew 3.1% QoQ at $125.1mn. This was largely led by a strong volume growth of 3.0% QoQ while blended pricing increased 0.5% QoQ. EBITDA margin improvement of 71bps QoQ was more of a surprise as the company had wage hike impact in the quarter.

Hexaware is a mid-cap IT company (CY14 revenues - USD 422mn) & a leading global provider of application development & maintenance (37.3%), enterprise services (14.6%), testing (20.8%), business intelligence & analytics (14.7%), BPO (5.7%) and Remote infrastructure management services (6.9%). The total headcount stands at 11,341 while the number of active clients stood at 234. The company's geographical revenue break-up is as follows; America (80.8%), Europe...

In-line profitability; deal wins provide growth visibility Hexaware posted in-line profitability with cc revenue growth of 3.5% qoq and 16.5% yoy. We believe that 1) strong deal bookings (US$100mn TCV in 9MCY15), 2) growth in RIMS and BPM services, 3) stable top accounts ahead, and 4) acceleration in top20-40 accounts are likely to drive US$ revenue/EPS CAGR of...