Business Profile of the Hexaware Technologies Limited
Hexaware Technologies is a global digital and technology services company with AI at its core, delivering innovative solutions for customers in their digital transformation journey. They embed AI into every aspect of their solutions and offer a suite of platforms and tools to help customers adapt and thrive in the AI-first era. The company manages its business through six operating segments, serving industries like Financial Services, Healthcare, Insurance, Manufacturing, Hi-Tech, Professional Services, Banking, and Travel and Transportation.
Its business operations span the Americas, Europe, and the Asia-Pacific. Hexaware is headquartered in Mumbai, Maharashtra, India.
Hexaware Technologies Limited IPO Objective
As per the draft red hearing prospects, the IPO issue consists only of offer for sale.
The OFS consists of up to [●] Equity Shares aggregating up to Rs. 99, 500 million. Nothing from those proceeds of OFS will be allotted to company.
IPO Details of Hexaware Technologies Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹1 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | [●] Equity Shares |
| aggregating up to ₹99,500 million | |
| Fresh Issue | N.A. |
| N.A. | |
| Offer For Sale | [●] Equity Shares |
| aggregating up to ₹99,500 million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not less than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Price & Size: Hexaware Technologies Limited IPO
The issue price of Hexaware Technologies Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company only has an OFS of up to [●] equity shares amounting to Rs. 9950 crores.
Launch Date of Hexaware Technologies Limited IPO
The IPO opening date of Hexaware Technologies hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Hexaware Technologies Limited Financial Statements
| For the six months ended | For the year ended | ||||
| June 30, 2024 | June 30, 2023 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
| INCOME | |||||
| Revenue from operations | 56843 | 51126 | 103803 | 91996 | 71777 |
| Other income | 401 | -236 | 88 | 1792 | 669 |
| TOTAL INCOME | 57244 | 50890 | 103891 | 93788 | 72446 |
| EXPENSES | |||||
| Employee benefits expense | 33362 | 29973 | 61282 | 55582 | 42772 |
| Finance costs | 227 | 198 | 378 | 335 | 345 |
| Depreciation and amortization expense | 1287 | 1263 | 2836 | 2444 | 2241 |
| Other expenses | 14994 | 12968 | 26710 | 24197 | 17676 |
| TOTAL EXPENSES | 49870 | 44402 | 91206 | 82558 | 63034 |
| PROFIT BEFORE TAX | 7374 | 6488 | 12685 | 11230 | 9412 |
| PROFIT FOR THE PERIOD/YEAR | 5536 | 5092 | 9976 | 8842 | 7488 |
| As at and for the 6 months ended | As at and for the FY ended Dec 31 | |||||
| Metric | Unit | June 30, 2024 | June 30,2023 | 2023 | 2022 | 2021 |
| Revenue from Operations | (in $ million) | 682.4 | 621.8 | 1256.4 | 1165 | 971.2 |
| Revenue from Operations | (in ₹ million) | 56843 | 51126 | 103803 | 91996 | 71777 |
| Revenue from Operations growth | in % | 11.20% | - | 12.80% | 28.20% | - |
| Revenue from Geography | ||||||
| Americas | in % | 73% | 71.30% | 71.50% | 73.00% | 70.10% |
| Europe | in % | 20.50% | 22.20% | 22.10% | 20.30% | 20.50% |
| Asia Pacific | in % | 6.20% | 6.50% | 6.40% | 6.70% | 9.40% |
| Revenues from Verticals (Operating segments) | ||||||
| Financial Services | in % | 28.40% | 26.80% | 27.20% | 28.90% | 29.50% |
| Healthcare and Insurance | in % | 21.10% | 22.10% | 21.70% | 22.60% | 21.60% |
| Manufacturing and Consumer | in % | 17.60% | 17.80% | 17.90% | 17.80% | 18.20% |
| Hi-Tech and Professional Services | in % | 16.30% | 16.40% | 16.00% | 16.40% | 15.10% |
| Banking | in % | 8.70% | 9.10% | 9.10% | 7.30% | 8.70% |
| Travel and Transportation | in % | 7.90% | 7.80% | 8.10% | 7.00% | 6.90% |
| Revenue by IT and BPS and others | ||||||
| IT services | (₹ in million) | 47814 | 43398 | 88261 | 79611 | 63260 |
| BPS | (₹ in million) | 7130 | 6439 | 16091 | 10816 | 7165 |
| Other | (₹ in million) | 1899 | 1289 | 2451 | 1569 | 1352 |
| Revenue by onshore, offshore IT services | ||||||
| Onshore IT Services | in % | 56.40% | 57.40% | 56.90% | 58.10% | 59.10% |
| Offshore IT Services | in % | 43.60% | 42.60% | 43.10% | 41.90% | 40.90% |
| Revenue by Customer Group | ||||||
| Top 5 customers | in % | 25.40% | 25.60% | 25.00% | 26.50% | 29.50% |
| Top 10 customers | in % | 35.60% | 36.00% | 35.50% | 36.60% | 38.40% |
| Top 20 customers | in % | 49.40% | 48.40% | 48.00% | 48.40% | 51.30% |
| Client Pyramid (number of active clients) | ||||||
| $75 million+ | (in numbers) | 3 | 2 | 2 | 2 | 1 |
| $50 million+ | (in numbers) | 3 | 3 | 3 | 3 | 3 |
| $20 million+ | (in numbers) | 14 | 11 | 11 | 9 | 6 |
| $10 million+ | (in numbers) | 30 | 25 | 29 | 28 | 19 |
| $5 million+ | (in numbers) | 56 | 53 | 54 | 51 | 43 |
| $1 million+ | (in numbers) | 177 | 170 | 171 | 170 | 141 |
| EBITDA | (in numbers) | 8888 | 7949 | 15899 | 14009 | 11998 |
| EBITDA Margin | in % | 15.60% | 15.50% | 15.30% | 15.20% | 16.70% |
| Adjusted EBITDA | (in numbers) | 9909 | 8192 | 16852 | 14664 | 13637 |
| Adjusted EBITDA Margin( | in % | 17.40% | 16.00% | 16.20% | 15.90% | 19.00% |
| Profit for the period/year | (in numbers) | 5536 | 5092 | 9976 | 8842 | 7488 |
| Profit Margin | in % | 9.70% | 10.00% | 9.60% | 9.60% | 10.40% |
| Adjusted Profit for the period/year | (in numbers) | 6673 | 5456 | 11326 | 9545 | 8282 |
| Adjusted Profit Margin | in % | 11.70% | 10.70% | 10.90% | 10.40% | 11.50% |
| Total number of employees (headcount) | (in numbers) | 31870 | 27229 | 28292 | 28608 | 24166 |
| Utilization rate for IT | in % | 82.40% | 77.80% | 79.70% | 79% | 80.50% |
| Attrition rate for IT service line | in % | 12.00% | 18.80% | 14.70% | 23.20% | 22.10% |
| Days Sales Outstanding | Number of Days | 43 | 53 | 49 | 55 | 52 |
Hexaware Technologies Limited Promoters & Shareholding
As the draft, CA Magnum Holdings is the only corporate promoter of the company.
The promoter’s aggregate holding in the company constitutes to 95.03% of the paid-up share capital of company, on a fully diluted basis.
Should You Subscribe to Hexaware Technologies Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Hexaware Technologies Limited:
Domain expertise
The company offers services and solutions across six industries,
- Financial Services
- Healthcare and Insurance
- Manufacturing and Consumer
- Hi-Tech and Professional Services
- Banking
- Travel and Transportation
Its deep domain expertise spans multiple sub-verticals, catering to different customer needs. The company partners with customers across industries to help them build, transform, run, and optimize their technology and business processes. They also provide cloud services and have been recognized for their expertise in various industries.
AI-led digital capabilities
The company has developed three AI-enabled digital platforms: RapidX™ for digital transformation, Tensai® for AI-powered automation, and Amaze® for cloud adoption. RapidX™ is a Gen AI-based platform for modern software engineering, focusing on the full SDLC. Tensai® is an automation platform that transforms enterprise IT processes, enabling secure, rapid, and automated code release.
Amaze® is a cloud migration, transformation, and data and application modernization platform that empowers customers with intelligent automation. The company prioritizes innovation by building its intellectual property portfolio, enhancing technological expertise, and investing in next-generation technologies.
Long-term relationships
Among the various kinds of clients the company attracts are 31 Fortune 500 companies. in 2023, 62% and 83% of income came from consumers with revenues of US$5 billion and US $ 1 billion. The business keeps a diverse clientele in many different sectors and countries. The company's NPS rose from 54 in 2023 to 72 in 2024; it has long-standing ties with elite clients with relationship ongoing since 15 years.
Customer acquisition and expansion
The company focuses on developing relationships with new customers across the Americas, Europe, and APAC through collaborative engagement. This is achieved through a go-to-market strategy that combines efforts from New Customer Acquisition, Account Management, Hybrid Sales, and Overlay Sales teams. The company prioritizes acquiring large enterprises with substantial IT budgets and long-term growth potential. In FY23, the company derived approx 62% and nearly 83% of its revenue from operations from customers with over US$5,000 million revenues and over US$1,000 million revenues.
The company's pre-sales, practice, global bid management, and marketing teams provide further support to sales efforts. While the practice team concentrates on acquiring and retaining specialized abilities in particular technological areas, the pre-sales team closes the gap between sales and technical teams. Through efficient handling of the end-to--end process of responding to proposals and information requests, the Global Bid Management team helps the sales team become more productive.
Future prospects
The company offer AI-led solutions tailored to specific industries and plans to enhance its offerings and platforms by leveraging three AI-enabled digital platforms: RapidX™ for digital transformation, Tensai® for AI-powered automation, and Amaze® for data and cloud adoption. They aim to invest in differentiated platforms and build add-on service capabilities in areas like product engineering, security, data and analytics, and emerging technologies.
The company also aims to expand relationships with existing customers by helping them solve new problems and becoming more engaged, responsive, and efficient.
The company seeks for big ticket clients including Fortune 500 firms with annual revenues exceeding US$2 billion.
They intend to enter unexplored markets and sectors including North America, Europe, and APAC. They also aim to expand into industries such as hi-tech, hospitality, and telecom. They invest in talent development programs through HexaVarsity and their Mavericks Learning Program, preparing campus graduates for their workforce.
Risk Factors of Hexaware Technologies Limited:
Geographic concentration
The company's revenue is primarily sourced from the Americas and Europe, which could be affected by economic or political changes, political unrest, disruptions, or sustained downturns in these regions. This could lead to customers terminating engagements or not awarding new ones. Additionally, weaker economic conditions could reduce the company's customer base, and a decline in demand for technology services or business spending could impact revenue. Although there have been no significant customer base decreases in these regions in recent years, these events could impact the company's financial condition.
| Geography | For the six months ended June | For the FY ended | |||
| 2024 | 2023 | 2023 | 2022 | 2021 | |
| % of revenue from operations | |||||
| Americas | 73.30% | 71.30% | 71.50% | 73.00% | 70.10% |
| Europe | 20.50% | 22.20% | 22.10% | 20.30% | 20.50% |
| Asia Pacific | 6.20% | 6.50% | 6.50% | 6.70% | 9.40% |
Segment concentration
As can be seen from table below financial services, healthcare & insurance contributes to a significant part of their revenue. Economic factors such as high interest rates, employment trends, inflation, and industry trends can affect the business. Tighter monetary policies or inflation may increase customers' borrowing costs and business expenses, reducing their disposable capital and propensity to pay for large-scale technology solutions.
| For the six months ended June | For the FY ended | ||||
| 2024 | 2023 | 2023 | 2022 | 2021 | |
| % of revenue from operations | |||||
| Financial Services | 28.40% | 26.40% | 27.20% | 28.90% | 29.50% |
| Healthcare and Insurance | 21.10% | 22.10% | 21.70% | 22.60% | 21.60% |
Revenue concentration
The company's business and prospects depend on scaling up with existing customers, and failure to do so could lead to revenue decline or fluctuation from year to year. Factors outside of the company's control, such as changes in strategic priorities, price reduction demands, market dynamics, and strategy changes, could also result in customer loss.
Revenue composition from clients has remained in a range for the past few years, and the company has not had significant decreases in its customer base in the given time. If the company cannot provide superior services and solutions at competitive prices or successfully market them to current and prospective customers, it could lose customers, market share, or be compelled to reduce prices, adversely affecting the company's business, results of operations, and financial condition.
| As at and for the 6 months ended | As at and for the FY ended Dec 31 | ||||
| Metric | June 30, 2024 | June 30,2023 | 2023 | 2022 | 2021 |
| Top 5 customers | 25.40% | 25.60% | 25.00% | 26.50% | 29.50% |
| Top 10 customers | 35.60% | 36.00% | 35.50% | 36.60% | 38.40% |
| Top 20 customers | 49.40% | 48.40% | 48.00% | 48.40% | 51.30% |
Product innovation and service offerings
The company's success relies on its ability to implement solutions, incorporate new technology, and develop digital service offerings that meet customer needs and industry standards. It invests heavily in research and development to stay updated and adapt to industry developments. The company's ability to develop and implement solutions in areas like artificial intelligence and automation is crucial for customer retention and attraction. If the company fails to invest in technology, adapt to industry developments, and expand its business, it could negatively impact its business.
Failure to protect intellectual property rights
The company and its subsidiaries hold a large collection of intellectual property rights, including 16 patents, 111 trademarks, two copyrights, and 47 domain names. Third parties may seek to register, acquire, or obtain similar intellectual property, which could infringe on or diminish the value of the company's intellectual property. Failure to maintain these registrations could negatively impact the company's reputation, goodwill, business prospects, and results of operations. Intellectual property developed as part of business engagements is typically owned by the customer. If the company becomes liable for infringement, it could face substantial damage awards, licenses, or termination of services.
Outsourcing business
The growth of business is influenced by customers' outsourcing budgets and strategic decisions on outsourcing IT services. Factors beyond companies control include increasing efficiency, technological advancements, use of AI and negative experiences with IT outsourcing. As 2024 approaches political elections, uncertainty about industry regulations and changes may impact our customers' decisions on outsourcing and budgets. Political events can also influence consumer and investor sentiment, impacting demand for our products and services.
Reliance on subcontractors and third-party service providers
The company executes agreements with subcontractors and third-party service providers to provide services to customers. The company cannot guarantee that these subcontractors will adhere to their contractual obligations and perform their services adequately. If these subcontractors discontinue their agreements, the company's business, financial condition, and results of operations may be adversely affected.
Hexaware Technologies Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Hexaware Technologies Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
