Hexaware Technologies December-quarter profit rises 66%, share falls over 7%

Hexaware Technologies, a newly re-listed IT services provider, announced its financial results for the December quarter (Q4CY24) on March 7, 2025. The company posted a 66% year-on-year (YoY) increase in net profit, reaching ₹321 crore, compared to ₹193 crore in the same quarter last year. Despite strong earnings, companies stock price fell by 7.41% intraday to a low of ₹759.10 on the Bombay Stock Exchange (BSE), reflecting concerns among investors.

Hexaware Technologies Q4 Financial Highlights

Revenue and Profit Growth

• Net Profit: ₹321 crore, up 66% YoY.
• Revenue from Operations: ₹3,154 crore, reflecting a 21% increase from ₹2,616 crore in the corresponding quarter last year.
• Revenue Growth in Constant Currency Terms: 18.8%.
• Revenue in Dollar Terms: $372 million, showing a robust performance in the global market.

The strong financial performance highlights Companies’ ability to capitalize on new-age digital transformation projects, focusing on cloud solutions, artificial intelligence (AI), and IT modernization services.

Client Acquisition and Business Expansion

During the December quarter, Hexaware Technologies expanded its client base, securing high-value customers across multiple revenue categories:

• 1 new customer in the $100 million+ revenue category.
• 4 new customers in the $20 million+ revenue category.
• 15 new clients added in CY24, compared to 11 clients in CY23, demonstrating improved customer acquisition momentum.

Additionally, Companies top 10 clients contributed 35.8% to total revenue, reflecting a strong and stable revenue base from key customers.

Key Business Wins and Major Deals

Hexaware Technologies made significant strides in digital transformation and IT modernization projects, winning key deals across sectors.

Cloud-Native Solutions and IT Workflow Modernization

• The company secured a contract to modernize IT workflows and user interfaces for a large secondary mortgage provider in the US.
• The project involves replacing the existing Appian system with AWS cloud-native solutions and implementing ServiceNow IT Service Management (ITSM) solutions.
• This transition will enable seamless IT operations and enhanced workflow automation, strengthening Companies position in the cloud solutions space.

AI-Driven Legacy Modernization for a Major Airline

• Hexaware also won a GenAI-powered legacy modernization project for a major US-based airline.
• The company will leverage its proprietary GenAI model to extract business rules and migrate applications to a new technology stack.
• This project aligns with Hexaware’s digital-first approach, helping enterprises adopt AI-driven automation and next-gen cloud solutions.

CEO’s Statement on Growth and Future Outlook

Commenting on the company’s performance, Hexaware Technologies CEO R. Srikrishna said:

“We are delighted to be public again. Materially outperforming industry growth with 18.5% YoY Q4CY24 revenue growth reflects the strength of Hexaware’s foundations: putting clients first, creating a home for great talent, and using platforms for real impact. We look forward to building on this momentum for a great CY25.”

The CEO’s statement indicates confidence in Hexaware’s long-term growth prospects, particularly in the areas of cloud-native transformation, AI-driven automation, and enterprise IT modernization.

Stock Performance: Why Did Shares Fall?

Despite strong earnings, Hexaware Technologies’ stock price plunged by 7.41% intraday to a low of ₹759.10 on the BSE after the earnings announcement.

• The stock closed at ₹780, 4.7% lower as of 1:30 PM, underperforming the Nifty IT index, which was down 0.9%.
• Since its re-listing on February 19, 2025, Companies shares have gained 7.2% from the issue price of ₹708.

Possible Reasons for the Share Price Decline

1. Profit-Booking by Investors
   • Given the recent listing of Hexaware, early investors may have taken profits after the stock’s initial gains.
   • The market reaction indicates that investors might be waiting for further clarity on the company’s growth strategy and order pipeline.
2. Industry-Wide Concerns
   • The Nifty IT index declined by 0.9%, suggesting that sector-wide concerns—such as global economic uncertainty and IT spending slowdowns—may have impacted Companies stock price.
3. Valuation Concerns
   • Some investors may perceive Hexaware’s valuation as stretched, given its recent price increase post-listing.
   • The stock’s price-to-earnings (P/E) ratio and forward-looking revenue guidance could be factors influencing market sentiment.

Financial Strength and Cash Reserves

• The company has a strong cash position, with cash and cash equivalents of ₹1,977 crore, providing significant financial stability.
• This robust cash reserve ensures Hexaware’s ability to invest in innovation, acquisitions, and technology upgrades, reinforcing its market leadership in the IT sector.

Future Outlook for Hexaware Technologies

Hexaware Technologies remains well-positioned for long-term growth, driven by:

1. Strong Demand for Cloud and AI Solutions
   • With enterprises rapidly migrating to cloud-native platforms, Hexaware’s expertise in AWS, Microsoft Azure, and AI-powered automation solutions will drive future revenue growth.
2. Increased Client Wins in High-Value Segments
   • The addition of a $100M+ client and multiple $20M+ clients indicates growing demand for Hexaware’s IT services and digital transformation expertise.
3. Expansion in the US Market
   • The US remains Hexaware’s largest revenue contributor, and new deals in mortgage finance, aviation, and cloud transformation will support continued business expansion.
4. AI-Driven IT Modernization
   • The GenAI-based projects secured by Hexaware reflect growing enterprise demand for AI-driven automation, a key driver for IT services in CY25 and beyond.

Conclusion

Hexaware Technologies reported impressive Q4CY24 earnings, with a 66% increase in net profit and a 21% rise in revenue. The company also secured major IT transformation deals, reinforcing its market position.

However, despite strong earnings, investor concerns over valuations, profit-booking, and IT sector trends led to a 7.41% drop in Hexaware’s share price.

With a strong cash position of ₹1,977 crore, new client acquisitions, and expansion into AI and cloud-native solutions, Hexaware is poised for sustained growth in CY25.

Investors should closely watch upcoming order wins, revenue guidance, and macroeconomic trends influencing the IT sector before making investment decisions.

Read more news on niftynews