Hexaware Technologies slips 9% post Q2 results

Shares of Hexaware Technologies have slipped 9% to Rs 453 per share on the BSE after the information technology (IT) company reported a flat EBITDA margin at 15.6% in June 2018 quarter (Q2CY18). The company has reported year on year (YoY) margin decline from 16.2% in Q2CY17.

The company’s consolidated net profit during the quarter up 14% at Rs 1.53 billion in Q2CY18 against Rs 1.34 billion in Q1CY18.

Revenue for the quarter at US $ 168.3 million grew by 3.8% quarter on quarter (QoQ), led by volume growth of 4.9%. Revenue in constant currency grew by 4.7% QoQ against analyst expectation of 5.2%.

“Hexaware Technologies has raised CY18 USD revenue guidance to 12-13% from 10-12% earlier. The revenue guidance translates to a CQGR of 2.6-3.8% for 3QCY18-4QCY18. Revenue growth and the business outlook is robust for the company; however, we are concerned about the EBIT margin decline,” analysts at Antique Stock Broking said in result review.

“Hexaware’s differentiated business strategy appears to be playing out well, as is evident from outperformance of the stock over the past year vs. broader market. However, growth has been slowing down over the past few quarters owing to client-specific issues. In light of slowing growth, we believe current valuation at 25.3x/21.9x CY18E/CY19E EPS is not inexpensive,” analyst at Reliance Securities said in result update.

The stock has corrected 19% from its 52-week high of Rs 557 recorded on July 9, 2018. In past one year, it had appreciated 134% from Rs 238 till July 9, as compared to 17.4% rise in the S&P BSE Sensex during the same period.

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