Even though it posted better- than-expected numbers in the March quarter of 2018, mid-sized information technology services firm Hexaware Technologies share price fell more than 14 per cent at the closing of the day’s trade on the BSE on Friday.
The company’s share closed at Rs 387.40, a drop of 14.15 per cent over Thursday. According to analysts tracking the company, the valuation of the stock was a bit expensive going by the business fundamentals and the drop in the price is a correction. The stock was earlier trading 21 times of its 2019’s estimated earnings.
“Even as we like the strategy of the company and an impressive leadership team, we find valuations expensive,” said a note by Kotak institutional Equities issued on Friday. “This is even after modelling 14.4 per cent revenue growth in the guidance of 10-12 per cent and 14 per cent in 2019. We assign a generous multiple of 18 times 2019 earnings, leading to a fair value of Rs 400,” it added.
In its first the quarter ended March 31, 2018 (Hexaware follows a January-December financial year), the company’s net profit grew 17.9 per cent to at Rs 1.34 billion on an year-on-year basis, while it posted a revenue growth of 9.2 per cent to Rs 10.49 billion.