Well-balanced growth for Hexaware

K.Venkatasubramanian BL Research Bureau | Updated on October 20, 2011

Mid-tier IT services company Hexaware Technologies has managed to deliver ahead of expectations on both revenues and profits.

The revival in the company's fortunes over the past 4-5 quarters with sustained momentum has continued with large-client additions, growth in key segments, and ramp-up of top customers.

During the September quarter, revenues increased 9.6 per cent sequentially to Rs 366 crore, while net profit expanded 7.4 per cent to Rs 64.7 crore. This is in line with what mid-tier peers such as MindTree and NIIT Technologies reported. In dollar terms, Hexaware has had a 5.3 per cent increase in revenues.

From an industry standpoint, top-tier players and select mid-tiers have not seen any significant cutbacks in projects, reduction in discretionary spends or pricing reductions. Hexaware's results reinforce these points.

The company has also reported a marginal increase in pricing.

Operational parameters

The BFSI vertical (34.4 per cent of revenues) has grown at a healthy 13.7 per cent, while the manufacturing, healthcare and services segment has expanded by 12.6 per cent. The travel and transport vertical (23.2 per cent of revenues) has grow at a slower 3.8 per cent.

Application services has grown at faster than the company rate while enterprise solutions continues to expand at a healthy pace suggesting no pullbacks even in discretionary spends of clients. These services account for 71 per cent of revenues.

As with other mid-tier companies, Europe has witnessed continued expansion, faster than even North America.

Hexaware has added a client in the $20-million plus category and a couple of customers in the $5-10 million bucket.

Its top clients have all grown at higher than company rates, suggesting improving client-mining capabilities. This has also led to lowering of selling expenses .

The company has also increased its offshore component of revenues by three percentage points to 46.3 per cent, thus optimising costs.

This also suggests that the company has been able to move execution of some of the large projects that it had bagged over the past few quarters offshore.

Published on October 20, 2011

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