PINC Result Review – Hexaware

Hexaware TechnologiesHexaware’s revenue grew by a robust 11.2%QoQ to USD61.1mn. EPS was Rs2.8 (including exceptional item). USD revenue guidance for Q4CY10 is 4.7-6.4%QoQ growth to USD64-65mn.

Strong volume led revenue growth, PAT boosted by exceptional item US and BFSI outperforms; TTHL surprised positively Sharp growth in EAS and analytics indicate uptick in discretionary IT spend Healthy new client addition; top clients ramp up

Outlook – Strong revenue growth, improved EBIT margins Hexaware has continued to show strong growth on the back of ramp up from the large deal but the profit has been under pressure. There are levers like utilisation improvement, increased offshoring and stable pricing, which will benefit the operating margin in CY11. The stock is trading at 9.8x CY11E earnings. We maintain ‘HOLD’ recommendation on the stock.