Hexaware Technologies
BSE SENSEX
28,091
Bloomberg
Equity Shares (m)
M.Cap.(INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val. (INR m)
Free float (%)
S&P CNX
8,691
HEXW IN
301.8
61.1 / 0.9
274 / 178
5/-25/-22
271
28.8
25 October 2016
3QCY16 Results Update | Sector: Technology
CMP: INR202
TP: INR230 (+14%)
Neutral
Top-5 clients drive revenues; Profit beat on utilization
Revenue in-line; but lopsided:
HEXW’s 3QCY16 revenue growth of 4.8% QoQ
CC was in line with estimates, and well ahead of peers. However, this was
driven by Top 5 clients (+13.7% QoQ). Revenue from remaining clients declined
2.9% QoQ. New deal wins continued to show strength as it clocked a TCV of
USD42m in the quarter (USD98m in 9MCY16), compared to USD120m in CY15.
Margin beat despite onsite skew:
EBITDA margins excluding ESOP charges
expanded by 210bp QoQ to 18.2% (against our expectation of +100bp QoQ to
17.2%). Profitability beat estimates despite higher onsite composition – largely
led by higher utilization (+410bp QoQ), absence of visa expenses and SG&A
rationalization (-100bp QoQ).
Announces buyback:
HEXW cut dividend payout last quarter to INR1 per share
(30% payout vs 67% in CY15). However, it announced a buyback amounting to
INR1.4b (at INR240 per share) this quarter, in addition to the INR1/share of
dividend. It identified buyback as the best means of returning cash to
shareholders, potentially indicating continuation of the same in the future.
Valuation and view:
While high payout is a positive for valuations, top-line
traction remains a function of few accounts for now, and overall growth is still
in single digits YoY. Near term outlook is comforting as HEXW expects next
couple of quarters to better the performance of corresponding quarters last
year, despite elevated furloughs. We expect USD revenue CAGR of 10.3% and
EPS CAGR of 11.4% over CY15-17E. Our target price of INR230 discounts
forward EPS by 14x. Maintain
Neutral.
Financials & Valuations (INR b)
2015 2016E
Y/E Dec
31.2
35.3
Net Sales
5.4
5.8
EBITDA
3.9
4.2
NP
12.9
13.8
EPS (INR)
22.1
6.4
EPS Gr. (%)
47.4
51.5
BV/Sh. (INR)
28.9
27.9
RoE (%)
27.7
25.3
RoCE (%)
64.5
38.5
Payout (%)
4.3
2.7
Div. Yield
2017E
41.0
7.0
4.9
16.0
16.6
62.2
28.2
27.1
24.0
2.0
Estimate change
TP change
Rating change
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Ashish Chopra
(Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530
Sagar Lele
(Sagar.Lele@MotilalOswal.com); +91 22 6129 1531

Hexaware Technologies
3QCY16 revenue in line; betters peers; but lopsided
HEXW’s 3QCY16 revenues grew by 4.2% QoQ to USD135.2m (and +8.1% YoY),
largely in line with our estimate of 5.1% growth (USD136.3m). In constant
currency terms, revenue grew by 4.8% QoQ.
In INR terms revenues came in at INR9b v/s our estimate of INR9.1b. Realized
currency rate was INR66.9/USD.
Revenue growth has been strong for the last two quarters, on expected lines,
dominating bulk of the growth expected in CY16.
Onsite revenue grew by 7.0% QoQ while offshore declined by 0.3%. The skew of
revenues towards onsite has been prominent towards since the past two years.
Deal wins from new customers clocked TCV of USD42m in 3QCY16, against
USD20m in 2Q and USD36m in 1Q – USD98m in 9MCY16 versus USD120m in
CY15; signifying a positive trend.
Exhibit 2: Growth has been stronger onsite in most of the
quarters lately
15.0
4.6
10.0
5.0
-
(5.0)
(10.0)
Growth in onsite (QoQ, %)
Growth in offshore (QoQ, %)
Exhibit 1: Strong growth seen in the last two quarters
USD Revenue (m)
6.5
7.8
4.1
0.3
-4.3
95.8
5.6
3.1
-0.8 -1.9
Growth - QoQ (%)
6.2
102.0 110.0 114.5 114.9 121.3 125.1 124.1 121.7 129.3 135.2
Source: MOSL, Company
Source: MOSL, Company
Gross margin was higher by 80bp to 35.4%. Margins during the quarter were
aided by increased utilization and the absence of visa expenses.
SG&A expenses were at 18% of sales, 100bp lower than the previous quarter.
Consequently, EBITDA margin expanded by 180bp QoQ to 17.4%.
ESOP expenses during the quarter increased to INR71m, from INR47m in
2QCY16, creating a tailwind of 30bp.
Excluding this, EBITDA margin expansion was 210bp QoQ.
Exhibit 4: SG&A expenses at 18% (-100bp QoQ)
EBITDA Margin (%)
19.6
17.5
19.3
17.5
17.9 17.8
17.4
SG&A (%)
18.8 19.0 19.0
18.0
Exhibit 3: Utilization improved sharply during the quarter
Utilization (%)
Offshore revenues (%)
19.2 16.7 18.0 19.9 17.8 17.1 17.8 15.9 14.6 15.6 17.4
Source: MOSL, Company
Source: MOSL, Company
25 October 2016
2

Hexaware Technologies
PAT grew by 11.5% QoQ to INR1.1b, compared to our estimate of INR1,088m
(+8.9% QoQ) – because of higher profitability.
Segment-wise performance: Broad-based pick-up
Revenue growth was broad-based when it comes to geographies – Americas
(5.6% QoQ), and APAC (2.7% QoQ). Revenue in Europe declined by 3.5% QoQ.
However, all the decline in Europe was attributed to cross-currency movement.
On a constant currency basis, revenue was flat in Europe.
Growth in ADM (5.3% QoQ), BPS (9.6% QoQ) and IMS (11.2% QoQ) was above
company average. Enterprise Solutions declined by 3.5% QoQ.
Among verticals, BFS was strong at 8.6% QoQ, followed by Travel &
Transportation at 4.5% QoQ
Exhibit 5: Growth driven ADM, BPO and IMS
Services
ADM
EAS
Testing
BI & Analytics
BPO
IMS
Total
Contr to Rev. (%)
37.3
12.2
20.2
15.2
6.8
8.3
100
Growth - QoQ (%)
5.4
-3.7
4.8
2.2
9.1
10.9
4.2
4 Qtr CQGR (%)
2.0
-2.5
1.2
2.8
6.6
6.8
2.0
Source: Company, MOSL
Exhibit 6: Client specific issues likely to weigh upon Travel & Transportation vertical
Verticals
Banking and Capital Markets
Travel and Transportation
Healthcare and Insurance
Emerging Segments
Contr to Rev. (%)
41.6
14.5
16.0
27.9
Growth - QoQ (%)
8.4
4.2
-2.5
2.4
4 Qtr CQGR (%)
4.6
-1.6
1.3
0.7
Source: Company, MOSL
Exhibit 7: Europe flat in constant currency
Geographies
Americas
Europe
RoW
Contr to Rev. (%)
82.0
11.6
6.4
Growth - QoQ (%)
5.7
-3.3
1.1
4 Qtr CQGR (%)
2.3
-2.4
6.4
Source: Company, MOSL
Top 10 clients contributed to 79% of the incremental growth in CY15.
Dependency continued with 71% of the incremental growth coming from top 10
accounts in 9MCY16.
25 October 2016
3

Hexaware Technologies
Exhibit 8: Robust growth in top accounts in 2QCY16
Client Metrics
Top 5 Clients (%)
Top 10 Clients (%)
Contr to Rev. (%)
47.0
58.3
Growth - QoQ (%)
13.7
10.1
4 Qtr CQGR (%)
4.4
3.7
Source: MOSL, Company
Exhibit 9: Growth driven by top 10 accounts
Growth in top 10 clients
10.0
5.0
-
(5.0)
(10.0)
Growth outside top 10 clients
Source: MOSL, Company
Dividend + Buyback = Payout similar to last year
HEXW reduced its payout in the previous quarter to 30% versus 67% in CY15. It
announced a dividend of INR1 per share in this quarter (27% payout).
However, it announced a buyback not exceeding INR1.4b at INR240 per share.
Cash and cash equivalents at the end of the quarter were at INR3.4b. The
buyback would significantly take cash out from the books.
Cash per share at INR11 per share has come down from INR13 at the end of
CY15 v/s INR15 at the end of CY14 and INR21 at the end of CY13.
25 October 2016
4

Hexaware Technologies
Takeaways from management commentary
Increased impact of furloughs in 4Q:
HEXW is confident of seeing volume
growth in 4Q. However, this could be counter balanced by the impact of lesser
number of working days and furloughs. The company expects more furloughs in
4Q, compared to the same quarter last year. Despite this YoY growth is expected
to be strong in the next quarter.
Profitability dependent on furloughs:
Profitability in 4Q is expected to be better
than what was last year. However, the impact of furloughs will determine the
movement of margins sequentially. The residual impact of wage hikes is also
expected to weigh upon profitability in 4Q. Although the quantum of wage hikes
onsite is yet to be determined, offshore increments are expected to have an
impact of USD100,000.
Pipeline if the highest ever:
New deal wins have been trending well over the
last few quarters. The aim for CY16 is to bag more deal wins compared to the
CY, wherein it won deals worth USD120m. 9MCY16 deal wins of ~USD100m lend
confidence towards that goal. Moreover, the pipeline (and the size of deals
being bid for) is at the highest ever in the company’s history.
Profitability improvement expected:
So far revenue growth has been strong for
HEXW, with profitability growing at a slower pace. The company expects these
two to be more balanced going forward. For the next two-three quarters,
margin growth is expected to outpace revenue growth. Although utilization is
expected to be range-bound, SG&A leverage and offshoring can result in margin
expansion.
Change in estimates
Revenue growth was a tad lower than expectations in 3Q, and the impact of
furloughs is expected to be higher in intensity in 4Q (compared to the previous
year). Moreover, offshoring is likely to pick-up post multiple quarters of onsite-
heavy growth. To adjust for these factors we have cut our revenue estimates by
0.6/1.5% for CY16/17E. We now expect growth of 8.0/12.8% respectively.
At the same time, the increased margin comfort – led by higher utilization,
increased offshoring and SG&A leverage has led us to increase our EBITDA
margin estimates by 40/20bp for CY16/17E to 16.3/17.1% respectively.
Consequently our EPS estimate for CY16/17E has changed by +1.2/-0.1% to
INR13.8/16.0 respectively. We are also factoring in lower other income on
account of the increased payout (resulting out of the buyback) in CY16.
Exhibit 10: Change in estimates
Change in Estimates
INR/USD
USD Revenue (m)
USD rev growth (%)
EBITDA Margin (%)
EPS (INR)
Revised
CY16E
67.4
524.1
8.0
16.3
13.8
CY17E
69.4
591.0
12.8
17.1
16.0
Earlier
CY16E
67.4
527.0
8.6
15.9
13.6
CY17E
69.4
600.1
13.9
16.9
16.1
Change
CY16E
-0.1%
-0.6%
-60bp
40bp
1.2%
CY17E
0.0%
-1.5%
-110bp
20bp
-0.1%
Source: Company, MOSL
25 October 2016
5

Hexaware Technologies
Valuation and view
HEXW’s long term strategic direction of playing a disruptor in the Enterprise
through technology-led cannibalization can be a rewarding one, but will need
continued investments towards building capabilities in areas like Automation.
That said, its traction within its top accounts can help it grab wallet share in the
names, if it can achieve the skill sets.
Volatility in the performance of top accounts has driven inconsistent financial
performance at HEXW over the past few years. However, strong traction in top-
10 accounts has driven strong revenue growth in CY15 and so far this year.
These accounts have contributed to 79% of the incremental growth in CY15, and
71% in 9MCY16.
It has also begun ramping up efforts to win new clients, which gets
substantiated from the fact that it won deals worth USD120m in CY15, followed
by USD98m in 9MCY16, from new customers, which was at a fraction of this at
the end of CY14. While these deals are up for ramp in CY16/17, growth in top
accounts has been volatile for the last few quarters because of client-specific
issues.
HEXW’s high growth in CY11 and CY12 was on the back of multiple large deal
wins, and they have remained elusive in the last couple of years. The company
too cited its endeavor to grow from smaller number of large deals than by larger
number of small-sized deals. On this front, HEXW has seen significant progress
as the composition of large deals in its pipeline has been much higher compared
to two years ago.
Although costs in CY15 increased to a much greater extent than revenue, the
same isn’t expected going forward. The company has heavily invested over the
last year, substantiated from the doubling of Sales & Marketing personnel.
Although investment intensity maybe lesser than earlier, ramp up of new deal
wins, onsite-driven growth and continued investments in capability building will
cap margin upside in the near term.
We expect HEXW to grow its USD revenues at a CAGR of 10.3% and EPS at a
CAGR of 11.4% during the period from CY15-17. While higher-than-peers payout
command valuation premium, volatility in large clients and lower growth in
CY16 will drag the same. Our target price of INR230 discounts forward EPS by
14x. Maintain
Neutral.
Key triggers
Large deal wins
Continued momentum in revenue growth
Offshore shift lever to margins
Key risks
Lower margins due to investments
Setback in business from one / more of the top clients
Prolonged sluggishness in foot-in-the door access amid challenging PeopleSoft
prospects.
25 October 2016
6

Hexaware Technologies
Exhibit 11: HEXW 1 year forward PE chart
30
20
11.6
10
0
2.3
PE (x)
Median(x)
Peak(x)
Min(x)
22.9
23.9
Avg(x)
Exhibit 12: HEXW 1-year forward PB chart
8.0
6.0
4.0
2.0
0.0
2.6
0.3
2.7
PB (x)
Median(x)
Peak(x)
Min(x)
Avg(x)
6.3
2.9
Source: Company, MOSL
Source: Company, MOSL
25 October 2016
7

Hexaware Technologies
Story in charts
Exhibit 13: Expect CY16 to be 3 year of single digit growth
in last 4
Revenue (USD m)
Growth (%)
rd
Exhibit 14: Performance in top 10 clients has been volatile
lately
Top-10 clients (USD m)
Growth (%)
33.3
18.3
7.7
6.4
8.9
14.9
8.0
48.1
12.8
18.2
188.1
205.6
9.3
217.8
22.9
5.9
8.9
267.8
217.7
231.1 308.1 364.4 387.8 422.3 485.4 524.1 591.0
CY10
CY11
CY12
CY13
CY14
CY15 CY16E CY17E
Source: Company, MOSL
107.5
159.2
Source: Company, MOSL
Exhibit 15: No growth in non-top 10 in 3Q
Top 5
Top 10
31
13
5
613 63 6
18
15
14
17
34 8
31
41
20
6 27 7
12
9
5 66 5 19
14
6
4
16
Non top 10
Exhibit 16: Investments to drive revenue growth have been
a priority over margin growth
EBITDA margin (%)
SG&A expenses (% of sales)
18.2
8.9
25.5
CY10
20.1
CY11
20.9
22.4
18.5
17.1
15.9
(1)
18.3
CY12
17.1
CY13
18.4
CY14
18.0
18.7
CY15 9MCY16
Source: Company, MOSL
Source: Company, MOSL
Exhibit 17: Utilization has played out well in 3Q
Utilization (%)
Offshore revenues (%)
Exhibit 18: Dividend payout rationalizes, but is compensated
by buyback
Post tax payout ratio (%)
289
53 50
103
0
75
108
99 103 87
74 74 88
37 33
Source: Company, MOSL
Source: Company, MOSL
25 October 2016
8

Hexaware Technologies
Operating metrics
Exhibit 19: Operating metrics
3QCY14 4QCY14 1QCY15 2QCY15 3QCY15 4QCY15 1QCY16 2QCY16 3QCY16
Revenue - Verticals (%)
Banking and Capital Markets
Travel and Transportation
Healthcare and Insurance
Emerging Segments
Total
Revenue - Service Lines (%)
Application Devt & Maint (ADM)
Enterprise Application Services (EAS)
Testing
Business Intelligence & Analytics
BPO
RIMS
Total
Revenue - Geography (%)
Americas
Europe
RoW
Total
Onsite: Offshore Revenue Mix (%)
Onsite
Offshore
Client Metrics
Repeat Business (%)
Clients billed
Clients added
Client Concentration (%)
Top 1
Top 5
Top 10
Client Size (Nos)
More than USD 1 Mn +
Between USD 1 to 5 Mn
Between USD 5 to 10 Mn
Over USD 10 Mn
DSO Days - Billed
DSO Days - Unbilled
36.3
16.1
15.9
31.7
100
36.9
15.6
15.5
32
100
37.4
16.5
15.6
30.5
100
36.7
17.4
15.7
30.2
100
37.6
16.7
16.4
29.3
100
37.5
16.6
17.4
28.5
100
39.2
15.3
17.5
28
100
40.0
14.5
17.1
28.4
100
41.6
14.5
16.0
27.9
100
36.8
17.1
20.2
15.2
4.2
6.5
100
36.4
16.6
20.9
15.4
4.3
6.4
100
37.6
15.5
20.7
15.4
4.8
6.0
100
37.8
14.3
20.9
15.1
5.2
6.7
100
37.3
14.6
20.8
14.7
5.7
6.9
100
38.1
14.3
20.6
14.0
5.7
7.3
100
37.8
13.7
20.2
15.2
5.8
7.3
100
36.9
13.2
20.1
15.5
6.5
7.8
100
37.3
12.2
20.2
15.2
6.8
8.3
100
78.8
14.3
6.9
100
78.8
15.1
6.1
100
80.8
13.1
6.1
100
81
13.4
5.6
100
80.8
13.8
5.4
100
81.3
13.1
5.6
100
81.4
12
6.6
100
80.9
12.5
6.6
100
82.0
11.6
6.4
100
56.2
43.8
57.6
42.4
58.9
41.1
61.2
38.8
60.8
39.2
62.3
37.7
63.1
36.9
63.9
36.1
65.6
34.4
95.7
233
10
95.5
236
10
95.2
227
10
96.2
225
9
95.3
223
9
95.7
226
9
94.7
229
10
95.2
226
6
95.4
222
7
14.4
38.2
51.4
14.9
40
53.1
14.9
42.8
55.5
15
44.4
56.1
13.6
42.7
54.4
42.2
54.7
42.9
55.3
43.1
55.2
47.0
58.3
61
42
11
4
47
68
61
40
13
3
47
63
62
42
11
4
51
77
62
43
10
5
47
74
65
48
8
5
54
80
69
53
7
5
49
72
73
58
6
5
49
78
76
62
6
3
46
74
77
63
6
5
50
75
Source: MOSL, Company
25 October 2016
9

Hexaware Technologies
Exhibit 20: Operating metrics
3QCY14 4QCY14 1QCY15 2QCY15 3QCY15 4QCY15 1QCY16 2QCY16
Employee Metrics (%)
Billable Personnel
Onsite
Offshore
Total
Marketing (Incl. Sales Support)
Others (Incl. Tech. Support)
Grand Total
Total Headcount
Utilization (%)
Attrition Rate (%)
Period Closing rate
Period average rate
Vertical Growth - QoQ (%)
Banking and Capital Markets
Travel and Transportation
Healthcare and Insurance
Emerging Segments
Total
Service Line Growth - QoQ (%)
Application Devt & Maint (ADM)
Enterprise Application Services (EAS)
Testing / BTO
Business Intelligence & Analytics
BPO
Remote IMS
Total
Geography Growth QoQ (%)
Americas
Europe
RoW
Total
Revenue Growth QoQ (%)
Top 5
Top 10
Non Top 10
3QCY16
20
72
92
2
6
100
9,697
70.3
13
62
61
21
71
92
2
6
100
10,016
73.0
14
63
62
22
69
91
3
6
100
10,100
73.6
17
63
62
21
70
91
3
6
100
11,009
72.1
17
64
64
21
70
90
4
6
100
11,341
70.4
17
66
65
21
69
90
4
6
100
11,375
69.7
17
66
66
22
69
91
4
5
100
11,599
69.6
16
66
67
24
67
90
5
5
100
11,875
70.0
17
68
67
25
65
90
5
5
100
11,859
74.1
17
67
67
17.2
-5.1
2.1
8.5
7.8
5.8
0.9
1.5
5.1
4.1
1.7
6.1
1.0
-4.4
0.3
3.6
11.3
6.2
4.5
5.6
5.7
-1.0
7.7
0.1
3.1
-1.1
-1.4
5.2
-3.5
-0.8
2.5
-9.6
-1.4
-3.7
-1.9
8.7
1.0
4.1
8.1
6.6
8.4
4.2
-2.5
2.4
4.2
9.3
-0.9
9.5
14.6
13.2
1.6
7.8
3.0
1.0
7.7
5.5
6.6
2.5
4.1
3.7
-6.3
-0.6
0.3
12.0
-5.9
0.3
6.1
-2.6
6.6
3.5
14.4
17.9
5.6
1.8
5.3
2.6
0.4
13.0
6.2
3.1
1.3
-2.8
-1.8
-5.5
-0.8
5.0
-0.8
-2.7
-6.0
-3.8
6.5
-0.2
-1.9
-1.9
4.0
2.7
6.0
8.7
19.4
13.9
6.6
5.4
-3.7
4.8
2.2
9.1
10.9
4.2
8.0
8.6
4.8
7.8
4.1
9.9
-8.0
4.1
2.9
-12.9
0.3
0.3
5.8
8.0
-3.1
5.6
2.9
6.2
-0.6
3.1
-0.2
-5.8
2.9
-0.8
-1.8
-10.2
15.6
-1.9
5.9
11.0
6.6
6.6
5.7
-3.3
1.1
4.2
10.1
8.9
6.7
9.0
7.5
0.4
7.4
4.9
-4.8
9.5
6.7
4.1
-0.8
0.0
7.1
-2.0
-0.3
-1.5
-0.3
-0.9
-3.2
7.1
6.4
6.8
13.7
10.1
-3.0
Source: MOSL, Company
25 October 2016
10

Hexaware Technologies
Financials and Valuations
Key Assumptions
Y/E December
INR/USD Rate
Revenues (USD m)
Total Headcount
Net Addition
Per Capita Productivity (USD)
Utilization uncl. Trainees (%)
Income statement
Y/E December
Sales
Change (%)
Cost of Services
SG&A Expenses
EBITDA
% of Net Sales
Depreciation
Other Income
PBT
Tax
Rate (%)
PAT
Extraordinary
Net Income
Change (%)
Balance Sheet
Y/E December
Share Capital
Reserves
Net Worth
Loan
Capital Employed
Gross Block
Less : Depreciation
Net Block
Curr. Assets
Debtors
Cash & Bank Balance
Other Current Assets
Current Liab. & Prov
Current Liabilities
Other liabilites
Net Current Assets
Deferred Tax
Application of Funds
E: MOSL Estimates
CY11
47.1
308
8,317
1,806
37,042
73.3
CY12
53.5
364
9,069
752
40,181
68.3
CY13
58.9
388
8,845
-224
43,847
71.7
CY14
61.1
422
10,016
1,171
42,163
72.9
CY15
64.3
485
11,375
1,359
42,673
72.3
CY16E
67.4
524
12,219
844
42,894
72.7
CY17E
69.4
591
13,767
1,549
42,928
75.4
(INR Million)
CY17E
41,003
16.1
26,655
7,329
7,019
17.1
627
186
6,578
1,696
25.8
4,882
-
4,882
16.6
(INR Million)
CY17E
604
18,325
18,929
440
19,369
15,476
4,493
10,983
14,107
5,838
3,850
4,419
5,721
365
5,356
8,386
-
19,369
CY11
14,505
37.6
8,939
2,920
2,646
18.2
248
677
3,075
407
13.2
2,668
-
2,668
324.2
CY12
19,482
34.3
11,846
3,562
4,074
20.9
324
290
4,040
764
18.9
3,276
25
3,251
21.9
CY13
22,854
17.3
13,826
3,904
5,124
22.4
386
58
4,796
1,004
20.9
3,792
-
3,792
16.6
CY14
25,817
13.0
16,278
4,763
4,776
18.5
440
(90)
4,247
980
23.1
3,267
(66)
3,333
(12.1)
CY15
31,235
21.0
20,262
5,618
5,355
17.1
482
173
5,046
1,114
22.1
3,932
-
3,932
18.0
CY16E
35,317
13.1
23,050
6,508
5,759
16.3
565
426
5,620
1,432
25.5
4,189
-
4,189
6.5
CY11
587
9,575
10,162
-
10,162
6,482
1,697
4,785
9,545
2,993
4,606
1,946
4,331
881
3,450
5,214
162
10,162
CY12
593
11,445
12,038
-
12,038
7,192
1,993
5,199
10,381
3,649
4,472
2,260
3,616
222
3,394
6,765
73
12,038
-
CY13
601
11,392
11,993
205
12,198
9,047
2,379
6,668
11,417
3,236
6,564
1,617
5,839
53
5,786
5,578
(48)
12,198
CY14
602
12,304
12,906
294
13,200
9,816
2,819
6,997
10,363
3,656
4,939
1,768
4,336
77
4,259
6,027
175
13,200
CY15
603
13,729
14,332
353
14,685
11,648
3,301
8,347
11,604
4,406
4,428
2,770
5,520
871
4,649
6,084
256
14,685
CY16E
604
15,045
15,649
440
16,089
13,876
3,866
10,010
11,113
5,088
2,172
3,852
5,033
365
4,668
6,080
-
16,089
25 October 2016
11

Hexaware Technologies
Financials and Valuations
Ratios
Y/E December
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout %
Valuation (x)
P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
ROIC
Turnover Ratios
Debtors (Days)
Fixed Asset T/O (x)
Cash Flow Statement
Y/E December
CF from Operations
Cash for Working Capital
Net Operating CF
Net Purchase of FA
Free Cash Flow
Net Purchase of Invest.
Net Cash from Invest.
Proc. from equity issues
Proceeds from LTB/STB
Dividend Payments
Net Cash Flow
Opening Cash Bal.
Add: Net Cash
Closing Cash Bal.
E: MOSL Estimates
CY11
8.9
9.9
34.4
4.0
43.9
CY12
10.9
12.0
40.3
5.4
48.7
CY13
12.6
13.9
39.9
11.1
85.8
CY14
10.6
12.1
42.9
8.5
77.4
19.1
11.4
2.1
4.7
4.2
26.6
24.3
38.5
75
3.4
29.3
30.3
46.4
68
4.0
31.6
33.3
56.8
52
3.9
25.7
27.6
48.0
52
3.8
CY15
12.9
14.6
47.4
8.7
64.5
15.6
10.3
1.8
4.3
4.3
28.9
27.7
41.0
51
4.1
CY16E
13.8
15.6
51.5
5.5
38.5
14.7
10.0
1.6
3.9
2.7
27.9
25.3
32.0
53
3.9
CY17E
16.0
18.1
62.2
4.0
24.0
12.6
7.9
1.4
3.2
2.0
28.2
27.1
32.2
52
3.9
(INR Million)
CY17E
5,451
(629)
4,822
(1,600)
3,222
92
(1,508)
-
-
(1,460)
1,854
2,172
1,854
3,850
CY11
1,991
(578)
1,413
(629)
784
454
(175)
37
(234)
(1,243)
(201)
4,753
(201)
4,606
CY12
3,084
(1,685)
1,399
(744)
655
403
(341)
6
-
(1,866)
(802)
4,606
(802)
4,472
CY13
3,496
3,279
6,775
(740)
6,035
370
(370)
8
205
(3,889)
2,729
4,472
2,729
6,564
CY14
2,568
(2,074)
494
(604)
(110)
218
(386)
1
89
(3,048)
(2,849)
6,564
(2,849)
4,939
CY15
4,661
(568)
4,093
(1,619)
2,474
91
(1,528)
1
59
(3,151)
(526)
4,939
(526)
4,428
CY16E
5,066
(2,251)
2,815
(2,053)
762
27
(2,026)
1
87
(3,374)
(2,497)
4,428
(2,497)
2,172
25 October 2016
12

Hexaware Technologies
Corporate profile
Company description
Hexaware is a global provider of IT and Process
outsourcing services, having clocked LTM revenues
of USD492m with the help of 11,599 people strong
headcount. The company’s key offerings include
managing large IT applications in real time as well as
in providing high value services around packaged
enterprise applications such as SAP and PeopleSoft.
Hexaware’s global operations are located in North
America, Europe and Asia Pacific.
Source: MOSL/Bloomberg
Exhibit 1: Sensex rebased
Exhibit 2: Shareholding pattern (%)
Sep-16
Promoter
DII
FII
Others
71.2
6.1
11.3
11.4
Jun-16
71.3
6.2
11.6
10.9
Sep-15
71.3
6.4
10.8
11.5
Source: Capitaline
Exhibit 3: Top holders
Holder Name
HDFC Trustee Company Ltd. A/C. HDFC
Midcap Opportunities Fund
T. Rowe Price International Discovery Fund
Fanklin Templeton Mutual Fund A/C.
Franklin India High Growth Companies Fund
% Holding
2.6
2.1
1.1
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
Atul K Nishar
P R Chandrasekar
R Srikrishna
Gunjan Methi
Designation
Chairman
Vice Chairman
Executive Director & CEO
Company Secretary
Exhibit 5: Directors
Name
Basab Pradhan
Christian Oecking
Jimmy Mahtani
Meera Shankar
Name
Bharat Shah
Dileep Choksi
Kosmo Kalliarekos
Punita Kumar Sinha
Source: Capitaline
Exhibit 6: Auditors
Name
Deloitte Haskins & Sells LLP
KPMG
Internal
Type
Statutory
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
13.8
16.0
Consensus
forecast
14.8
16.4
Variation (%)
-7.0
-2.4
Source: Bloomberg
Source: Capitaline
25 October 2016
13

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