Hexaware Technologies Limited IPO
The Company is a global digital and technology services company with Artificial Intelligence (AI) at its core. Their focus is on leveraging cutting-edge technology-driven solutions to enable seamless digital transformation for businesses worldwide. By embedding AI into every aspect of their services, they empower organizations to adapt, innovate, and optimize their operations in this AI-first era.
Industry Focus and Segments
Their business is structured into six key operating segments, catering to diverse industries:
i. Financial Services ii. Healthcare and Insurance
iii. Manufacturing and Consumer iv. Hi-Tech and Professional Services
v. Banking vi. Travel and Transportation
This segmentation allows us to **customize solutions** that meet the specific needs of businesses within each industry.
Service Offerings
They provide five broad categories of services that form the foundation of their business:
i. Design & Build – Creating scalable and innovative digital solutions.
ii. Secure & Run – Ensuring security and operational excellence in IT services.
iii. Data & AI – Utilizing AI-driven insights for enhanced decision-making.
iv. Optimize – Improving operational efficiency and business performance.
v. Cloud Services – Supporting cloud adoption, migration, and optimization.
Global Presence
They serve clients across the Americas, Europe, and the Asia-Pacific (APAC) region, including India and the Middle East. Their diverse geographic footprint allows them to deliver localized solutions while maintaining global expertise.
Objects of the Hexaware Technologies Limited IPO:
Hexaware Technologies Limited IPO Details:
| Open Date: | Feb 12 2025 |
| Close Date: | Feb 14 2025 |
| Total Shares: | 12,35,87,570 |
| Face Value: | ₹ 1 Per Equity Share |
| Issue Size: | 8,750.00 Cr. |
| Lot Size: | 21 Shares |
| Issue Price: | ₹ 674 - 708 Per Equity Share |
| Listing At: | NSE,BSE |
| Listing Date: | Feb 19 2025 |
Promoters And Management:
Financials of Hexaware Technologies Limited IPO:
| Metric ( In million ) | 9MFY24 | 9MFY23 | 2023 | 2022 | 2021 |
| Revenue from Operations | 88,200 | 77,643 | 103,803 | 91,996 | 71,777 |
| Other Income | 513 | -12 | 88 | 1,792 | 669 |
| TOTAL INCOME | 88,713 | 77,631 | 103,891 | 93,788 | 72,446 |
| Employee Benefits Expense | 51,453 | 45,557 | 61,282 | 55,582 | 42,772 |
| Other Expenses | 23,349 | 19,586 | 26,710 | 24,197 | 17,676 |
| EBITDA | 13,911 | 12,488 | 15,899 | 14,009 | 11,998 |
| OPM | 15.68% | 16.09% | 15.30% | 14.94% | 16.56% |
| Finance Costs | 453 | 306 | 378 | 335 | 345 |
| Depreciation & Amortization | 2,025 | 1,897 | 2,836 | 2,444 | 2,241 |
| PBT | 11,433 | 10,285 | 12,685 | 11,230 | 9,412 |
| Tax Expense | 2,900 | 2,237 | 2,709 | 2,388 | 1,924 |
| PAT | 8,533 | 8,048 | 9,976 | 8,842 | 7,488 |
| NPM | 9.67% | 10.37% | 9.61% | 9.61% | 10.43% |
Comparison With Peers:
| Company ( fig. in Cr) | Revenue (FY24) | PAT (FY24) | OPM | NPM | Market Cap | P/E Ratio |
| Hexaware Technologies | 11749 | 1100 | 15.78 | 9.36% | 42000 | 37x |
| Persistent Systems Ltd | 9822 | 1093 | 17% | 11.13% | 97000 | 73x |
| Coforge Ltd | 9174 | 836 | 16% | 9.11% | 57000 | 74x |
| LTIMindtree Ltd | 35000 | 4585 | 18% | 13.10% | 176000 | 38 |
| Mphasis Ltd | 13000 | 1555 | 18% | 11.96% | 54000 | 33x |
Recommendation on Hexaware Technologies Limited IPO:
1. Financial Overview
According to the RHP (Red Herring Prospectus), Hexaware's 9MFY24 revenue is ₹8,871 crore and PAT (Profit After Tax) is ₹853 crore. When annualized, the full-year revenue is estimated to be ₹11,000 crore, and PAT is likely to be around ₹1,100 crore.
2. Outstanding Shares and Valuation
Total Outstanding Shares (Pre and Post-IPO): 60.7 crore shares (since the IPO is a pure OFS, no new shares are issued).
At the IPO price of ₹708, Mcap = ₹37,000 crore, and the P/E ratio is 37x.
3. Peer Comparison (Based on RHP)
Hexaware's valuation has been compared with its industry peers:
- Persistent Systems: P/E of 73x
- Coforge Ltd: P/E of 77x
- Mphasis: P/E of 33x
- LTI Mindtree: P/E of 38x
At the IPO price, Hexaware's valuation aligns more closely with Mphasis and LTI Mindtree but is lower than Persistent Systems and Coforge. However, for IPO investors, an ideal price would be ₹600 to leave more value on the table. Additionally, since this is a pure OFS (Offer for Sale), no proceeds from the IPO will benefit the company itself.
4. Carlyle’s Investment and Returns
Carlyle acquired Hexaware in FY22-23 at a price of ₹382 per share, valuing the company at approximately ₹23,000 crore. Carlyle holds around 57.7 crore equity shares (~95%) of Hexaware, and in the IPO, they are selling 12.35 crore shares.
5. Carlyle is achieving a nearly 2x return in less than three years, plus it has received over ₹1,000 crore in dividends during this period.
Conclusion
The IPO valuation at ₹708 per share provides a balanced comparison with industry peers. However, a price of ₹600 would offer additional value for IPO investors, considering the company’s growth potential and the fact that the offering is entirely a divestment by Carlyle.
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Discussion on Hexaware Technologies Limited IPO:
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Avoiding due to the present market conditions.