Introduction:
Hexaware Technologies, a global IT services company specializing in AI-driven solutions, is making its return to the public markets with an Initial Public Offering (IPO). This article provides an in-depth analysis of the IPO, covering key details, financial performance, strengths, risks, and investment recommendations.
Hexaware IPO Details
| Particulars | Details |
|---|---|
| IPO Size | ₹8,750 crore |
| Price Band | ₹674 – ₹708 per share |
| Lot Size | 21 shares |
| Issue Period | February 12 – February 14, 2025 |
| Listing Date | February 19, 2025 |
| Stock Exchanges | BSE and NSE |
Financial Performance
| Financial Metrics | CY21 | CY22 | CY23 | 9M CY24 |
| Revenue (₹ crore) | 7,178 | 9,200 | 10,380 | 8,820 |
| EBIT (₹ crore) | 909 | 977 | 1,298 | 1,375 |
| PAT (₹ crore) | 749 | 884 | 998 | 1,046 |
| ROE (%) | 21.4 | 24.3 | 24.9 | 22.8 |
| ROCE (%) | 23.4 | 24.1 | 29.3 | 27.3 |
Strengths
- AI-Driven Growth: Hexaware leverages AI for digital transformation, boosting efficiency and client engagement.
- Strong Client Base: The company serves 31 Fortune 500 firms, ensuring steady revenue streams.
- Global Reach: Presence across the Americas, Europe, and Asia-Pacific enhances its market diversification.
Risks
- Client Concentration: Nearly 50% of revenue comes from the top 20 clients, posing dependency risks.
- Intense Competition: The IT services market is highly competitive, with established global players.
- Geographic Exposure: A significant portion of revenue depends on Western economies, making it vulnerable to economic downturns.
Valuation
At the upper price band of ₹708, Hexaware’s Price-to-Earnings (P/E) ratio stands at approximately 41.1x based on CY23 earnings, aligning with industry benchmarks.
Investment Recommendation
Expert Opinions
- Value Research Online: Commends Hexaware’s steady growth but flags competitive and client concentration concerns.
- SBI Securities: Suggests subscribing at the cut-off price, citing AI-driven solutions and a strong cash position.
Conclusion
Hexaware Technologies’ IPO presents a compelling opportunity in the AI-driven IT services space. However, investors should weigh the risks of client concentration and industry competition. Consulting a financial advisor is advisable before making an investment decision.
For more details, read the Hexaware DRHP.
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