Hexaware Tech falls 10% on profit booking post March quarter results

Hexware Technologies has dipped 10% to Rs 408 on the market in early morning trade despite strong March quarter results. The numbers came in as a suprise for analysts as the company did not raise its revenue guidance, which put a question on whether the growth momentum seen till now will continue going ahead.
The company has reported better than expected 3.3% quarter on quarter (qoq) revenue growth in constant currency (CC) terms in March 2018 quarter (Q1CY18). Net profit of the company during the quarter grew 10.9% at Rs 1.34 billion over the previous quarter. Revenue was up 4.4% qoq at Rs 10.49 billion. EBITDA (earnings before interest, tax, depreciation and amortization) margin however declined 40 bps to 15.5% in Q1CY18 from 15.9% in Q4CY17.

“Despite strong Q1CY18 and strong visibility of demand, the management refrained from revisiting its guidance upwards (guided for 10-12% growth in CY18) given the lower visibility on client spends,” analysts at Emkay Global Financial Services said in result update.

It expects strong Q2CY18 given the seasonality factor and may review the annual guidance only post Q2CY18 earnings given the continued caution in client spends. We have factored in robust revenue/earnings CAGR of 10%/11% over CY17-20E. However, the current valuation discounts these positives adequately, the brokerage firm said.