On Friday, the stock of Hexaware Technologies fell 9 per cent on the bourses. This was after the IT company revised its guidance for the October to December quarter and for the calendar year 2012.

The company expects to grow 18 per cent (from 20 per cent) y-o-y in calendar year.

Shares in Hexware Technologies closed at Rs 96.55, down 9.30 per cent on the BSE. The revision of guidance was on account of changes to a “project plan in a large engagement” for a customer. Hexaware Technologies now expects its revenues to grow to Rs 495 crore.

While disclosing its July-September results, the IT and BPO services provider had issued a revenue guidance of Rs 509.5-519.2 crore.

Hurricane effect

“The revised revenue guidance also includes impact of Rs 2.4 crore on account of Hurricane Sandy on the Eastern Coast of the US of America,” said Hexaware Technologies in a release.

“The relationship with the client remains solid. All other projects and initiatives with the client continue unchanged and on track. The company remains on course to deliver above industry revenue growth over the medium-term,” said P.R. Chandrasekar, CEO and Vice-Chairman, Hexaware Technologies.

Following this, some brokerages have downgraded the stock. Broking firm Asit C Mehta has downgraded the stock to ‘Hold.’ “The downward revision is entirely based on unanticipated changes made by one of the top clients. These changes relate to the project delivery method, scope and timeline,” said a note prepared by the brokerage.

Margins are also expected to take a ‘massive’ hit. “All this is likely to lead to a 500 bps-700 bps decline in 4QCY12 Ebitda margin. It is also likely to impact cash flow and expect the IT firm to cut dividend payout for CY-13E from 44 per cent to 30 per cent,” said Nirmal Bang in a report, which has also downgraded the stock to ‘Hold’.


(This article was published on December 7, 2012)
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