Stock Review: Hexaware Technologies

 

THE counter of Mumbai based mid-tier software solutions provider Hexaware Technologies saw renewed investor interest on Monday following the upward revision in revenue guidance by the company for the September 2010 quarter.

    Hexaware's stock shot up by nearly 10% on Monday from its previous close. It however needs to be noted that the proportion of delivered shares in total transacted shares was at a two-month low of 18%. This suggests a higher trading activity and lower participation of medium and longterm investors.

    The stock has underperformed the broader market over the last one year. It fell by nearly 10% as against a 17% gain in the Sensex during the period. It could not earn returns for shareholders even during the last one month even as the Sensex shot up by 7%. The depressed performance reflects the company's sluggish financials in the four quarters ended March 2010.

    However, the company appears to have gained momentum since the June quarter given a robust sequential growth in its sales and profits. Further, on Monday, it reported that it has already exceeded the annual headcount estimate in the second quarter itself. It also anticipates a strong 9.2% sequential revenue growth for the September 2010 quarter.

    The company had earlier estimated an addition of 1,000 employees in the year ending December 2010. The fact that it has already added more than 1100 employees to its payroll indicates a buoyant demand scenario for the company.

    This is also evident from the fact that the company bagged its single largest contract worth $110 million for a period of 5 years from a US based Fortune 500 Corporation in the last quarter.

    It has also reported an extension worth $60 million to an existing transaction for three years with a multi-billion dollar enterprise. In order to service the large size deals coming its way, the company has been on a steady spree of increasing its employee headcount. Over the last three quarters, company has been inducting fresh graduates consistently and intends to continue the trend in the coming quarters as well.

    On Monday, company revised its revenue guidance for the September'10 quarter to Rs 274 crore. This would be for the second time in-line the company would exceed its quarterly revenue guidance. The company reported a topline of Rs 251 crore during the June'10 quarter against the revenue guidance of Rs 243 crore. Given the improved demand scenario and enhanced revenue visibility on account of the large deals procured, the company is expected to fare well in the coming quarters.