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Hexaware Technologies IPO Analysis: AI-Powered Growth and Investment Insights
Introduction
Hexaware Technologies Ltd. (HTL) is a leading AI-driven digital solutions provider from India. With consistent revenue and profit growth, strong global presence, and a robust dividend policy, the company is set to launch its IPO. This article provides a deep dive into its financials, industry positioning, and investment potential.
Company Overview
- Business Model: AI-first digital and technology services company.
- Core Services: Design & Build, Secure & Run, Data & AI, Optimize, and Cloud Services.
- Industries Served: Financial Services, Healthcare, Insurance, Manufacturing, Consumer, Hi-Tech, Professional Services, Banking, Travel, and Transportation.
- Key AI Platforms:
- RapidX™: Digital transformation.
- Tensai®: AI-powered automation.
- Amaze®: Cloud adoption.
- Global Reach: 39 delivery centers, 16 offices, operating in 28 countries.
- Fortune 500 Clients: Serves 31 major enterprises.
IPO Details
- IPO Type: Offer for Sale (OFS)
- Total Shares: 12,35,87,570 equity shares
- IPO Size: Rs. 8,750 Cr. (at upper price band)
- Price Band: Rs. 674 – Rs. 708 per share
- Subscription Period: February 12 – February 14, 2025
- Lot Size: 21 shares
- Listing: BSE and NSE
- Employee Reservation: Rs. 90 Cr. worth shares with Rs. 67 discount per share
- Allocation:
- QIBs: 50%
- Retail: 15%
Financial Performance
| Year | Revenue (Cr.) | Net Profit (Cr.) | PAT Margin |
|---|---|---|---|
| CY21 | 7,244.60 | 748.80 | 10.04% |
| CY22 | 9,378.80 | 884.20 | 9.60% |
| CY23 | 10,389.10 | 997.60 | 9.60% |
| 9M-CY24 | 8,871.30 | 853.30 | 9.70% |
- CAGR Growth: 13.7% (USD terms, 2021-2023)
- EPS (Avg. 3 years): Rs. 15.18
- RoNW (Avg. 3 years): 23.2%
- P/BV (Post-IPO): 8.82
- P/E (Post-IPO, CY24 Annualized): 37.82
- Dividend Yield:
- 400% (CY21)
- 1100% (CY22)
- 875% (CY23)
- 425% (9M-CY24)
Order Book and Revenue Projections
| Year | Order Book (Cr.) | Revenue Target (Cr.) |
| CY24 | 10,500 | 11,500 |
| CY25 | 12,000 | 13,000 |
| CY26 | 14,500 | 15,000 |
| CY27 | 16,500 | 17,500 |
| CY28 | 18,000 | 20,000 |
Industry Comparison
| Company | P/E Ratio |
| Persistent Systems | 73.9 |
| Coforge | 75.1 |
| LTIMindtree | 38.5 |
| Mphasis | 33.0 |
| Hexaware (IPO) | 43.12 |
- Competitive Advantage: HTL is positioned among top players in AI-driven digital solutions.
- Market Share: Among top 3 in AI-enabled services globally.
Strengths and Risks
Strengths:
- AI-First Approach: Strong suite of AI-powered platforms.
- Consistent Financial Growth: CAGR revenue growth of 13.7%.
- Diverse Clientele: 31 Fortune 500 companies.
- Strong Global Presence: Operations in 28 countries.
- Dividend-Paying Company: Regular high dividend payouts.
- Robust Order Book: Increasing demand for AI solutions.
Risks:
- IPO Valuation: Fully priced at 43.12 P/E.
- Macroeconomic Uncertainty: Global IT demand fluctuations.
- Pure OFS: No new capital raised for business expansion.
Investment Recommendation
- Short-Term: Listing gains possible due to strong demand.
- Medium to Long-Term: Promising growth due to AI dominance.
- Target Price: Potential upside if revenue growth sustains at 13-15% CAGR.
- Ideal for: Well-informed investors seeking AI-driven growth companies.
Conclusion
Hexaware Technologies is a strong AI-focused IT services company with a consistent track record. The IPO is fully priced, but the company has strong long-term potential due to AI adoption, global presence, and a solid client base. Investors with a medium to long-term horizon may consider investing in this dividend-paying growth stock.
Disclaimer: This analysis is for informational purposes only. Please conduct your own research before making investment decisions.
Disclaimer: The projections of potential returns are based on current market conditions and company performance. Actual results may vary due to various factors, including market dynamics, economic conditions, and changes in the competitive landscape. Investors should conduct their own research and consult with financial advisors before making investment decisions.
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