ICICI Securities has maintained its “BUY” recommendation on Hexaware Technologies with a target price of Rs 580, implying an upside potential of nearly 26% from the current market price of Rs 461. The brokerage believes the company’s near-term softness in revenue growth is transitional rather than structural, with momentum expected to recover from Q2CY26 onward. Strong deal wins, improving traction in healthcare and banking, rising AI-led transformation demand, and operating leverage are expected to support both revenue acceleration and margin expansion over the next several quarters. Despite weakness in the travel segment and macro uncertainties linked to the Middle East conflict, the brokerage remains optimistic about Hexaware’s medium-term earnings trajectory and valuation comfort.

ICICI Securities Reaffirms BUY Rating With Rs 580 Target

Hexaware Technologies continues to attract bullish commentary from ICICI Securities, which has retained its positive stance following the company’s Q1CY26 earnings performance. The brokerage highlighted that while quarterly revenue growth remained subdued, execution quality, deal momentum, and improving demand visibility support a constructive long-term outlook.

The research house values Hexaware at 20x CY27 estimated earnings per share of approximately Rs 29, arriving at a fair value target of Rs 580. According to the brokerage, the current valuation does not fully capture the company’s improving growth profile and margin recovery potential.

Quarterly Performance Comes In Better Than Expected

Hexaware reported revenue performance that modestly exceeded management’s own expectations for the quarter. Revenue declined marginally by 0.3% quarter-on-quarter in constant currency terms, compared with ICICI Securities’ estimate of 0.4% growth. However, the decline was less severe than feared at the beginning of the quarter.

The company generated approximately USD 3 million in volume growth, with nearly two-thirds contributed by acquisitions. This growth was offset by calendar-related headwinds and lower furlough reversals. Management indicated that these temporary pressures are likely to reverse in Q2CY26.

Healthcare and insurance emerged as the strongest-performing vertical, registering 9.6% sequential dollar growth, largely driven by ramp-ups in large European contracts. In contrast, the travel vertical declined sharply by 9.6% due to airline clients facing pressure from elevated fuel prices amid geopolitical instability in the Middle East. Financial services also softened due to budget reductions within a major GCC account.

Large Deal Wins Strengthen Medium-Term Growth Visibility

One of the biggest positives in the quarter was the acceleration in large deal closures. Hexaware secured three significant vendor consolidation deals across the banking, professional services, and GSE segments, alongside an important extension deal with a major global banking client.

Management described the banking extension contract as one of the most meaningful surprises during the quarter, with material volume increases expected during the second half of CY26.

The company also secured multiple AI-led contracts and acquisition-driven opportunities through CyberSolve and SMC. These wins are expected to support stronger growth momentum from Q2 onward.

Importantly, Hexaware reiterated its guidance of delivering at least 7.6% year-on-year dollar revenue growth in CY26, despite macroeconomic uncertainties.

AI-Led Transformation Emerging As Core Competitive Driver

Artificial intelligence is increasingly becoming the centerpiece of Hexaware’s strategic positioning. The company stated that AI adoption within the Software Development Life Cycle (SDLC) is currently the single largest source of differentiation and deal activity.

Hexaware has launched a next-generation IT operations platform called Tensai, equipped with “Reasoning Ops” capabilities. The platform is designed to reduce inferencing costs by relying heavily on smaller language models rather than expensive external large language models.

Management noted that over 90% of clients already possess some form of AI tooling but are struggling to move beyond limited productivity gains. Hexaware’s strategy focuses on redesigning delivery structures and helping enterprises unlock significantly higher efficiency improvements.

Several notable AI engagements were highlighted during the quarter:

• A pharmaceutical client is rebuilding clinical data systems using agentic AI.
• An airline customer is deploying multimodal AI and virtual reality for aircraft repair workflows.
• A semiconductor manufacturer is using custom AI models to improve fab productivity and SKU output.

The company also revealed that it has built a network of 75 AI delivery champions within its financial services vertical alone, underscoring the scale of its AI integration efforts.

Margins Improve Despite Cost Pressures

Hexaware’s profitability metrics showed encouraging resilience during the quarter. EBIT margin came in at 13.3%, comfortably ahead of ICICI Securities’ estimate of 12.4%. Excluding one-time items and earnout reversals, adjusted EBIT margin stood at 14.6%, reflecting a 40-basis-point sequential improvement.

The company benefited from:

• 90 basis points from rupee depreciation
• 50 basis points from operational improvements
• Higher utilization levels rising to 82.6%

These gains were partly offset by lower working days, large deal ramp-up costs, and recurring labour code-related expenses.

Management maintained its EBIT margin guidance of 13%–14% for CY26 and expects profitability to improve further during the second half of the year as operating leverage strengthens.

Financial Metrics Continue To Support Long-Term Outlook

ICICI Securities expects Hexaware’s financial profile to strengthen steadily over the next two years.

The brokerage projects revenue growth from Rs 1,53,136 million in CY26 to Rs 1,74,001 million in CY27, while EBITDA margin is expected to expand from 16.3% to 17.2%. Net profit is estimated to rise sharply from Rs 14,413 million to Rs 18,045 million during the same period.

The following table captures the brokerage’s core financial estimates:

Key Risks Investors Should Monitor

Despite the positive outlook, the brokerage highlighted several risks that could affect execution.

These include:

• Potential disruption from leadership changes
• Competitive pricing pressure within the IT services industry
• Unfavourable vendor consolidation outcomes
• Client insourcing initiatives
• Deflationary impact from generative AI adoption

The travel and transportation vertical also remains vulnerable to macroeconomic instability and elevated fuel prices linked to geopolitical tensions.

Stock Valuation Still Attractive Despite Recovery Potential

ICICI Securities believes Hexaware’s current valuation leaves room for further upside. The report noted that the stock is trading near 18x one-year forward earnings, close to the lower end of its historical valuation range.

Given improving deal momentum, AI-led differentiation, margin expansion opportunities, and stronger revenue visibility from Q2CY26 onward, the brokerage believes the risk-reward equation remains favourable for long-term investors.

The stock’s ability to convert AI demand into scalable enterprise contracts could become a major catalyst for earnings acceleration over the next several quarters.