4 November 2015
3QCY15 Results Update | Sector: Technology
BSE SENSEX
26,553
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
8,040
HEXW IN
300.9
74.0/1.2
335/131
-4/1/30
406
28.7
Hexaware Technologies
CMP: INR246
TP: INR250 (2%)
Upgrade to Neutral
Revenue growth bogged down by 6.5% decline in top client
Revenue growth back on track:
HEXW’s 3QCY15 revenues grew 3.1% QoQ to
USD125.1m, below our estimate of 4.6% growth. Revenue growth was weighed
upon by weakness in the top account (-6.5% QoQ). In the last four quarters,
growth has been mainly driven by top 10 accounts, led by HEXW’s client mining
efforts (74% of incremental revenues).
Margin expansion despite partial wage hikes:
EBITDA margin grew 80bp to
17.8%, marginally ahead of our estimate of 17.4%. Factors affecting gross margin:
[1] Calendar days (72bp), [2] Utilization (-132bp), [3] One time 2Q termination
cost (+82bp), [4] One time 2Q H1B visa cost (+59bp), [5] Currency (+56bp), [6]
Offshore wage hike (-38bp), and [7] Gratuity and other cost increase (-39bp).
SG&A costs were 40bp lower QoQ despite an addition of 30 marketing personnel.
Strong deal wins from new accounts:
While the growth in HEXW has largely been
driven by top accounts so far, it announced deals wins from new accounts at a
TCV of USD100m in 9MCY15. These are expected to ramp up largely in CY16; thus
adding to prospective growth, apart from traction in top accounts.
Upgrade to Neutral after valuation correction:
Post 3Q, our estimates change
marginally, to account for the revenue growth miss and beat on margins. Earnings
estimates have changed by -1.8% and -0.3% for CY15 and CY16 respectively.
HEXW has corrected by ~20% in the last quarter, and currently trades at 15.2x
CY16E, thereby eliminating the downside implied to our price target of INR250.
HEXW enjoys a premium to most tier-II peers, primarily supported by healthy
dividend payout (dividend yield of 4% on CY16E earnings), and above-industry-
average growth rates (16.1% revenue CAGR and 23% EPS CAGR over CY14-16E).
Our target price discounts CY16E EPS by 15x. Upgrade to
Neutral.
Financials & Valuation (INR b)
Y/E DEC
Sales
EBITDA
PAT
EPS (INR)
EPS Gr. (%)
RoE (%)
RoCE (%)
Payout (%)
P/E (x)
EV/EBITDA(x)
2014 2015E 2016E
25.8
4.8
3.3
10.6
-15.6
25.7
28.2
77.4
23.1
14.1
31.5
5.6
4.1
13.6
27.9
29.9
28.8
61.1
18.1
12.2
38.0
7.0
4.9
16.2
19.0
32.3
33.5
57.9
15.2
9.8
Estimate change
TP change
Rating change
Ashish Chopra
(Ashish.Chopra@MotilalOswal.com); +91 22 3982 5424
Sagar Lele
(Sagar.Lele@MotilalOswal.com); +91 22 3982 5585
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Hexaware Technologies
3QCY15: Revenues driven down by weakness in top client
HEXW’s 3QCY15 revenues grew 3.1% QoQ to USD125.1m (and 14% YoY), a tad
below our estimate of 4.6% growth. In constant currency, revenue growth stood
at 3.5% QoQ.
In INR terms revenues came in at INR8.18b v/s our estimate of INR8.25b.
Realized currency rate was INR65.4/USD (v/s our assumption of INR65/USD).
Volume growth during the quarter was ~3.6% QoQ, while realization dropped
0.5% QoQ.
Revenue growth during the quarter was bogged down by weakness in the top
client; which saw revenues decline by 6.5% QoQ. Excluding this, overall revenue
growth stood at 5% QoQ, which is in line with the seasonal strength in 3Q.
Revenue growth in 3Q was driven by offshore, as opposed to the trend seen in
the last five quarters. CQGR in onsite revenues over the last five quarters is
6.4%, compared to 1.2% for offshore. In 3Q, onsite revenues grew by 2.5% QoQ
and offshore revenues by 4.2% QoQ.
Higher composition of offshore revenues also drove part of the 80bp expansion
seen in EBITDA margins. Gross margin was at 35.3%, up 30bp (v/s our estimate
of 34.9%). EBITDA margin was at 17.8%, up 80bp (v/s our estimate of 17.4%).
SG&A expenses were lower during the quarter at 17.4% of sales, compared to
an average of 18% over the last four quarters.
Exhibit 2: Pick-up seen in non-top 10 clients; top client
drives revenues from top-10 down
Growth in top 10 clients
10
5
0
121.3 125.1
-5
-10
-15
Growth outside top 10 clients
Exhibit 1: Revenue growth weighed upon by decline in top
client
USD Revenue (m)
4.3
0.7
1.3
95.8
-4.3
6.5
7.8
4.1
0.3
Growth - QoQ (%)
5.6
3.1
1.8
94.1 94.8 98.8 100.1
102.0 110.0 114.5
114.9
Source: MOSL, Company
Source: MOSL, Company
Exhibit 3: Revenues shifted onsite by 360bps in the last two
quarters, utilization dropped 150bp, both hurting margins
Utilization (%)
Offshore revenues (%)
74.6 72.9
73.6 72.1
70.8 70.3 73
70.6 70.9 71.8
70.4
Exhibit 4: EBITDA margin was above estimate, led by INR
depreciation, higher offshoring, and lower SGA
EBITDA Margin (%)
18.4
17.5
15.7 16.9 17.4
19.6 19.3
SG&A (%)
17.5 17.9 17.8 17.4
47.65 47.5 46.4 46.7 47.1 45.2
43.8 42.4
41.1 38.8 39.2
19.3 23.7 23.8 22.5 19.2 16.7 18.0 19.9 17.8 17.1 17.8
Source: MOSL, Company
4 November 2015
Source: MOSL, Company
2

Hexaware Technologies
PAT grew 12.7% QoQ to INR1.12b, but was below our estimate (INR1.15b)
despite a beat on margins, mainly on account of lower revenues, and lower
other income.
ETR was lower by 110bp QoQ, to 22.4%. This has inched up in the last two
quarters as one SEZ moved to 50% tax exempt bracket from 100%.
Payout remained healthy, at 61% (Dividend of INR2.25 per share).
Segment-wise performance:
Transportation and APAC
Broad
based
excluding
Travel
and
Growth was led by Europe (6.2% QoQ, 9.8% YoY) and Americas (2.9% QoQ,
16.6% YoY). APAC was sluggish (-0.6% QoQ, -11% YoY). Weakness in APAC has
been mainly due to lack of focus on small deals.
Among services, BPO surged 13% QoQ (54.3% YoY), followed by Remote IMS
(6.2% QoQ and 20.7% YoY) and Enterprise Application Services (5.3% QoQ and -
2.9% YoY). Larger services like ADM (+1.8% QoQ and 15.3% YoY) and Testing
(+2.6% QoQ and 17.1% YoY) grew below company average.
Among verticals, Healthcare and Insurance grew 7.7% QoQ (17.3% YoY) and
Banking and Capital Markets grew 5.7% QoQ and 17.8% YoY. All verticals
(excluding emerging segments) grew 17-18% YoY.
Exhibit 5: Only Enterprise Solutions (EAS) was soft during the quarter
Services
ADM
EAS
Testing
BI & Analytics
BPO
IMS
Total
Contr to Rev. (%) Growth - QoQ (%)
37.3
1.8
14.6
5.3
20.8
2.6
14.7
0.4
5.7
13.0
6.9
6.2
100
3.1
4 Qtr CQGR (%)
3.6
-0.7
4.0
2.4
11.5
4.8
3.3
Source: Company, MOSL
Exhibit 6: All verticals grew 17-18% YoY
Verticals
Banking and Capital Markets
Healthcare and Insurance
Travel and Transportation
Emerging Segments
Contr to Rev. (%) Growth - QoQ (%)
4 Qtr CQGR (%)
37.6
5.7
4.2
16.7
-1.0
4.2
16.4
7.7
4.1
29.3
0.1
1.3
Source: Company, MOSL
Contr to Rev. (%) Growth - QoQ (%)
4 Qtr CQGR (%)
80.8
2.9
3.9
13.8
6.2
2.4
5.4
-0.6
-2.9
Source: Company, MOSL
Exhibit 7: APAC continues to remain sluggish, traction in Americas and Europe
Geographies
Americas
Europe
RoW
Top 2-5 Clients (8.6% QoQ) again drove growth during the quarter, on the back
of 9.9% in the previous quarter. However, revenues from the top account
witnessed a decline of 6.5% QoQ, after several quarters of sustained strength.
On a 4 quarter CQGR basis there has been healthy growth across the top 5
clients which was the outcome of company’s focused client mining strategy,
though top client and top 6-10 accounts saw some volatility.
3
4 November 2015

Hexaware Technologies
Exhibit 8: Growth continues to be drive by top-5 accounts
Client Metrics
Top Client
Top 2-5 Clients (%)
Top 6-10 Clients (%)
Contr to Rev. (%)
13.6
29.1
11.7
Growth - QoQ (%)
4 Qtr CQGR (%)
-6.5
1.8
2.1
8.6
3.1
0.2
Source: MOSL, Company
Takeaways from management commentary
Strong growth in top-20 accounts
HEXW saw 3.8% QoQ growth in its top 20 accounts during this quarter. Majority of
the incremental revenue growth in the last few quarter has been led by these
clients. On account of its client mining efforts, it has added several new names in
this category, displacing some of the earlier one; indicating a gain of critical mass in
smaller and scalable accounts.
Deal wins worth USD100m won in 9MCY15
In the first nine months of CY15, HEXW won deals with a TCV of USD100m from new
customers. This reporting doesn’t include any deal wins from existing customers. Of
these, was a multi-year infrastructure technology services outsourcing deal and a
multi-year multi-million product maintenance and enhancement deal in agile. Both
these deals are instrumental given the fact that they involve newer technologies and
new development methods that are getting evolved, and will help in showcasing
capabilities going ahead.
Focus on larger deals
HEXW has been focusing on building a pipeline of larger deals. It has been
deliberately walking away from smaller deals. This has also reflected in its revenues
from APAC, which have seen a decline/sluggish growth for the last few quarters.
This geography was dominated by deals that are project-based and smaller in size.
Effect of seasonality to affect 4QCY15 and 1QCY16
Revenue growth in 4Q is expected to be negatively impacted by seasonal weakness.
The management cited increased, more than usual, likelihood of furloughs in some
customers, which would lead to weak revenue growth for 4QCY15. Apart from this,
the calendar effect should be seen impacting revenue growth in 1QCY16 too.
However, despite this, the management maintained its outlook of beating the
industry average growth rate for CY15.
Wage hike impact to be seen in 4QCY15 too
Margins in 3Q were negatively impacted by offshore wage hikes to the extent of
38bp. 4Q is likely to be negatively impacted because of one month of offshore wage
hike and onsite wage hike, to the extent of 55bp.
Demand environment across segments
3Q saw some weakness in verticals like manufacturing and travel & transportation.
The management expects a pick-up in manufacturing in a couple of quarters.
Growth in travel & transportation was muted because 2Q saw a sharp jump in
revenue. The outlook for this vertical remains positive as airlines have seen huge
savings because of subdued oil prices, which are translating into increased IT spend.
4 November 2015
4

Hexaware Technologies
Change in estimates
We have cut our CY15/16 USD revenue estimates by 0.8%/0.7% respectively,
owing to the slight miss on revenue growth estimates in 3Q, and to factor for
the increased effect of seasonality in 4Q.
Our EBITDA margin estimates are up 10bp/20bp for CY15/16 mainly because of
the beat in 3Q.
Our EPS estimate are down 1.8% for CY15 and 0.3% for CY16 due to: [1]
Revenue growth miss and [2] Higher effective tax rate going forward.
Exhibit 9: Change in estimate
Revised
CY15E
CY16E
INR/USD
USD Revenue (m)
USD rev growth (%)
EBITDA Margin (%)
EPS (INR)
64.4
489.4
15.9
17.7
13.6
66.8
569.0
16.3
18.4
16.2
Earlier
CY15E
64.3
493.5
16.9
17.6
13.9
CY16E
66.8
572.8
16.1
18.3
16.3
Change
CY15E
0.1%
-0.8%
-100bp
10bp
CY16E
0.0%
-0.7%
20bp
20bp
-1.8%
-0.3%
Source: Company, MOSL
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-
5 accounts has driven strong revenue growth in the past four quarters (USD
revenue CQGR of 6.2%). These accounts have contributed to 68% of the
incremental growth seen in the last four quarters.
It has also begun ramping up efforts to win new clients, which gets
substantiated from the fact that it won deals worth USD100m in the first nine
months of CY15, from new customers. With these deals up for implementation
in CY16, coupled with the momentum witnessed in top accounts, the outlook of
above-industry-average growth rate gets cemented to a greater extent.
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. Progress on this front has been visible given the
lasting decline in revenues from APAC, which had a large number of deals that
were small in size, and project driven.
We expect HEXW to grow its USD revenues at a CAGR of 16.1% and EPS at a
CAGR of 23.2% during the period from CY14-16. Expectation of strong revenue
growth and stable margins, combined with 60%+ dividend payout and strong
RoE make a case of higher multiple. HEXW has corrected by ~20% in the last
quarter, and currently trades at 15.2x CY16E, thereby eliminating the downside
implied to our price target of INR250. HEXW enjoys a premium to most tier-II
peers, primarily supported by healthy dividend payout (dividend yield of 4% on
5
4 November 2015

Hexaware Technologies
CY16E earnings), and above-industry-average growth rates (16.1% revenue
CAGR and 23% EPS CAGR over CY14-16E). Our target price discounts CY16E EPS
by 15x. Upgrade to
Neutral.
Key triggers
Large deal wins
Continued 5%+ trajectory in quarterly 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.
Exhibit 11: HEXW 1-year forward PB chart
8.0
6.0
11.5
4.0
2.0
0.0
2.4
2.5
0.3
PB (x)
Median(x)
Peak(x)
Min(x)
6.6
5.0
Avg(x)
Exhibit 10: HEXW 1 year forward PE chart
30
20
10
0
PE (x)
Median(x)
Peak(x)
Min(x)
24.0
Avg(x)
24.0
2.3
Source: Company, MOSL
Source: Company, MOSL
Exhibit 12: Comparative Valuation
Company
Mphasis
Mindtree
KPIT Tech
Hexaware
Persistent Sys.
Mkt cap
(USD b)
1.6
2.0
0.5
1.2
0.8
Rating
Neutral
Neutral
Neutral
Neutral
Neutral
TP (INR)
520
1400
155
250
675
Upside
(%)
7.4
-7.7
7.6
1.6
1.7
EPS (INR)
FY16E
FY17E
35.7
73.1
13.5
13.6
38.7
40.9
93.2
15.5
16.2
48.2
P/E (x)
FY16E
FY17E
13.6
20.8
10.6
18.1
17.2
11.8
16.3
9.3
15.2
13.8
RoE (%)
FY15-17E CAGR (%)
FY16E
FY17E USD rev.
EPS
13.2
27.9
18.8
29.9
20.6
14.3
29.3
17.9
32.3
3.3
15.4
4.2
16.1
12.6
20.8
14.6
23.4
22.3
15.9
15.1
Source: Company, MOSL
4 November 2015
6

Hexaware Technologies
Story in charts
Exhibit 13: Momentum likely to lead to industry-leading
revenue growth rate
Revenue (USD m)
33.3
18.3
7.7
231.1
CY10
308.1
CY11
364.4
CY12
6.4
387.8
CY13
8.9
422.3
CY14
489.4
CY15E
569.0
CY16E
107.5
CY10
159.2
CY11
15.9
16.3
48.1
18.2
9.3
188.1
CY12
205.6
CY13
CY14
217.8
5.9
199.9
LTM
27.3
Growth (%)
Exhibit 14: Strong pick-up in top accounts; led by efforts in
client mining
Top-10 clients
Revenue (USD m)
Growth (%)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 15: Consistent strength seen in top 2-5 accounts, and
volatility in top account and top 6-10 clients
Top client
33
11
2
10
3
4 7
-4
3
9
1816
3
6
Top 2-5
Top 6-10
46
39
33
27
22
3
7
39
Exhibit 16: Investments to drive revenue growth have been
a priority over margin growth
EBITDA margin (%)
25.5
SG&A expenses (% of sales)
22.4
20.1 20.9
18.3
18.2
17.1 18.518.4 17.717.8
1
8.9
-12
CY10
Source: Company, MOSL
CY11
CY12
CY13
CY14
CY15
Source: Company, MOSL
Exhibit 17: Ample levers in utilization and offshoring
Utilization (%)
Offshore revenues (%)
Exhibit 18: Cash returning to shareholders – dividend payout
continues to be remain healthy
Post tax payout ratio (%)
289
74.6 72.9
70.8 70.3 73 73.6 72.1 70.4
70.6 70.9 71.8
47.65 47.5 46.4 46.7 47.1 45.2
43.8 42.4 41.1 38.8 39.2
53
103
50
0
75
99
103
87
74
74
Source: Company, MOSL
Source: Company, MOSL
4 November 2015
7

Hexaware Technologies
Exhibit 19: Change in estimates
3QCY13 4QCY13 1QCY14 2QCY14 3QCY14 4QCY14 1QCY15 2QCY15 3QCY15
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
35.8
18.8
16.3
29.1
100
36.3
18.6
16.7
28.4
100
32.3
18
17.5
32.2
100
33.4
18.3
16.8
31.5
100
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
36.4
29.6
14.1
9.9
4.1
5.9
100
36.4
29.7
13.9
10.0
3.8
6.2
100
37.5
18.1
21.1
13.4
3.7
6.2
100
36.3
18.6
19.9
14.3
4.0
6.9
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
65.5
28.1
6.4
100
66.1
27.5
6.4
100
78.1
14.3
7.6
100
78.7
14.2
7.1
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
53.6
46.4
53.3
46.7
52.9
47.1
54.8
45.2
56.2
43.8
57.6
42.4
58.9
41.1
61.2
38.8
60.8
39.2
96.2
225
13
95.5
233
10
94.5
235
11
94.8
238
13
95.7
233
10
95.5
236
10
95.2
227
10
96.2
225
9
95.3
223
9
15.6
40
54.3
14.4
39.2
53.4
14.1
38.2
50.7
13.4
37.4
50.9
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
53
37
8
5
54
69
55
39
7
5
48
63
56
41
6
5
48
70
56
40
8
4
51
69
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
Source: MOSL, Company
4 November 2015
8

Hexaware Technologies
Exhibit 20: Change in estimate
3QCY13 4QCY13 1QCY14 2QCY14 3QCY14 4QCY14 1QCY15 2QCY15 3QCY15
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 1
Top 2-5
Top 6-10
20
72
92
2
6
100
8950
71.8
12
63
63
19
73
92
2
6
100
8854
74.6
13
62
62
19
73
92
2
6
100
8952
72.9
13
60
61
20
72
92
2
6
100
9287
70.8
13
60
60
20
72
92
2
6
100
9697
70.3
13
62
61
21
71
92
2
6
100
10016
73.0
14
63
62
22
69
91
3
6
100
10100
73.6
17
63
62
21
70
91
3
6
100
11009
72.1
17
64
64
21
70
90
4
6
100
11341
70.4
17
66
65
5.1
0.5
6.8
4.2
4.2
2.8
0.3
3.8
-1.1
1.3
-14.8
-7.4
0.3
8.5
-4.3
10.1
8.2
2.2
4.2
6.5
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
-0.5
6.4
13.0
1.1
-0.7
13.8
4.2
1.3
1.7
-0.1
2.4
-6.1
6.5
1.3
-1.4
-41.7
45.3
28.2
-6.8
-4.3
-4.3
3.1
9.4
0.4
13.6
15.1
18.5
6.5
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
1.7
11.3
1.0
4.2
2.3
-0.8
1.3
1.3
13.1
-50.2
13.6
-4.3
7.3
5.7
-0.5
6.5
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
17.8
5.5
-2.0
-6.5
3.0
0.6
-6.3
-7.0
-15.8
1.2
6.0
15.0
15.9
6.9
5.4
7.7
9.8
3.3
0.3
11.5
-2.7
6.3
11.2
-2.7
-6.5
2.1
3.1
Source: MOSL, Company
4 November 2015
9

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 (%)
CY10
45.6
231
6,511
1,374
35,498
71.0
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
CY15E
64.4
489
11,501
1,485
42,553
72.8
CY16E
66.8
569
13,104
1,604
43,424
75.8
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
CY10
10,545
1.5
6,915
2,692
938
8.9
242
249
945
92
9.7
853
224
629
(53.2)
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)
CY15E
31,494
22.0
20,305
5,601
5,588
17.7
473
185
5,300
1,205
22.7
4,096
-
4,096
22.9
(INR Million)
CY16E
37,993
20.6
23,767
7,219
7,007
18.4
505
(131)
6,371
1,497
23.5
4,874
-
4,874
19.0
(INR Million)
CY16E
603
15,077
15,680
352
16,032
11,684
3,796
7,888
13,002
5,893
3,600
3,509
5,128
816
4,312
7,874
271
16,032
CY10
291
9,601
9,892
112
10,004
5,598
1,519
4,079
8,092
1,919
4,753
1,420
2,336
(213)
2,549
5,756
169
10,004
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
10,161
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
12,037
(1)
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
13,199
CY15E
603
13,875
14,478
352
14,830
11,084
3,291
7,792
12,050
4,967
4,125
2,958
5,283
816
4,467
6,766
271
14,830
4 November 2015
10

Hexaware Technologies
Financials and valuations
Ratios
Y/E December
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout %
Valuation (x)
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios
Debtors (Days)
Fixed Asset T/O (x)
CY10
2.1
2.9
33.5
3.0
137.9
CY11
8.9
9.9
34.4
4.0
43.9
27.6
24.9
25.1
4.6
7.2
1.6
6.8
11.8
66
2.6
26.6
24.0
75
3.4
CY12
10.9
12.0
40.3
5.4
48.7
22.6
20.6
16.6
3.5
6.1
2.2
29.3
30.5
68
4.0
CY13
12.6
13.9
39.9
11.1
85.8
19.5
17.7
12.8
2.9
6.2
4.5
31.6
33.9
52
3.9
CY14
10.6
12.1
42.9
8.5
77.4
23.1
20.3
14.1
2.6
5.7
3.4
25.7
28.2
52
3.8
CY15E
13.6
15.2
48.1
8.5
61.1
18.1
16.2
12.2
2.2
5.1
3.5
29.9
28.8
58
4.3
CY16E
16.2
17.9
52.1
9.6
57.9
15.2
13.8
9.8
1.8
4.7
3.9
32.3
33.5
57
4.9
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
CY10
685
(563)
122
542
665
1,140
1,682
32
(74)
(233)
1,529
4,262
1,529
4,753
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
CY15E
4,771
(1,553)
3,218
(1,137)
2,081
119
(1,018)
1
58
(3,110)
(851)
4,939
(851)
4,125
(INR Million)
CY16E
4,849
(1,633)
3,216
(600)
2,616
170
(430)
-
-
(3,507)
(722)
4,125
(722)
3,600
4 November 2015
11

Hexaware Technologies
Corporate profile
Company description
Hexaware is a global provider of IT and Process
outsourcing services, having clocked LTM revenues
of USD422m with the help of 10,016 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
Exhibit 1: Sensex rebased
350
300
250
200
150
Nov-14
Feb-15
May-15
Aug-15
Nov-15
Hexaware Technologies
Sensex
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Sep-15
Promoter
DII
FII
Others
71.3
10.8
6.4
11.5
Jun-15
71.4
14.1
4.3
10.3
Sep-14
64.5
21.8
2.5
11.2
Source: Capitaline
Exhibit 3: Top holders
Holder Name
HDFC Trustee Company Ltd A/c HDFC
Government Pension Fund Global
% Holding
1.9
1.6
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
Jack Hennessy
Kosmo Kalliarekos
Name
Bharat Shah
Dileep Choksi
Jimmy Mahtani
Punita Kumar Sinha
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Deloitte Haskins & Sells LLP
KPMG
Type
Statutory
Internal
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY15
FY16
MOSL
forecast
13.6
16.2
Consensus
forecast
13.1
15.5
Variation (%)
3.4
4.8
Source: Bloomberg
Source: Capitaline
4 November 2015
12

Hexaware Technologies
NOTES
4 November 2015
13

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