5 August 2015
2QCY15 Results Update | Sector: Technology
Hexaware Technologies
BSE SENSEX
27,011
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val (INR m)/Vol ‘000
S&P CNX
8,182
HEXW IN
300.7
85.3/1.4
335 / 139
12/22/93
453/1979
28.7
CMP: INR284
TP: INR255 (-10%)
Sell
Strong revenue beat led by onsite ramp
Revenue growth back on track:
HEXW’s 2QCY15 revenues grew 5.6% QoQ to
USD121.1m (and 19% YoY), above our estimate of 3.6% growth. While offshore
revenues were flat QoQ, growth in onsite revenues was 9.7% QoQ. That has now
been a trend over the last 5 quarters, in which the CQGR at onsite is 7.9%,
compared to 0.8% at offshore.
ESOP costs and onsite ramp drive lower EBITDA margin:
Onsite-heavy revenues
also drove below-estimate margins – Gross margin excluding ESOP costs was 36%
(+30bp QoQ), v/s our estimate of 36.7%. PAT grew 19% QoQ to INR989m, but was
below our estimate of INR1082m, mainly on account of ESOP charges (INR80m)
and higher effective tax rate of 23.5%, v/s estimate of 22.5%. Payout remained
high, at 61% (Dividend of INR2 per share).
Embarking on “Data-2-Digital” strategy:
HEXW is adopting a two-pronged
approach to win business in the market: [1] In large enterprises, it is only bidding
for deals where it can play the disruptor through cannibalization by providing
savings of 50% or more. Automation is a key tool towards this end, and [2] HEXW
will continue to be a full service operator for the mid-market segment.
Valuations ahead of fundamentals:
While our revenue estimates are up
1.9%/2.3% post the results, the earnings estimates are up only 1% due to ESOP
charges and higher tax rate. At 16.7x CY16E, HEXW continues to enjoy a premium
to even top-tier IT peers, primarily supported by a very healthy payout. However,
our target of INR255 discounts CY16E EPS by 15x, factoring the top-clients
concentration risk. CMP suggests 10% downside to our TP. Maintain
Sell.
Free float (%)
Financials & Valuation (INR b)
Y/E DEC
Sales
EBITDA
PAT
EPS (INR)
EPS Gr. (%)
RoE (%)
RoCE (%)
Payout (%)
P/E (x)
2014 2015E 2016E
25.8
4.8
3.3
10.6
-15.6
25.7
28.2
77.4
26.4
30.4
5.5
4.0
13.3
25.3
30.0
30.1
67.6
21.1
14.4
35.8
6.8
5.1
16.8
26.4
35.9
34.8
69.4
16.7
11.9
EV/EBITDA(x)
16.3
Estimate change
TP change
Rating change
Ashish Chopra
(Ashish.Chopra@MotilalOswal.com); +91 22 3982 5424
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
2QCY15: Revenue beat on onsite ramp
HEXW’s 2QCY15 revenues grew 5.6% QoQ to USD121.1m (and 19% YoY), above
our estimate of 3.6% growth. Revenue growth in constant currency too, was
5.5% QoQ.
In INR terms revenues came in at INR7.72b v/s our estimate of INR7.56b.
Realized currency rate was INR63.63/USD (v/s assumptions of INR63.5/USD).
Revenue growth during the quarter was led by volumes, helped by higher
number of working days. Volume growth during the quarter was ~5.8% QoQ,
while realization rates dropped 0.7% QoQ.
While offshore revenues were flat QoQ, growth in onsite revenues was 9.7%
QoQ. That has now been a trend over the last 5 quarters, in which the CQGR at
onsite is 7.9%, compared to 0.8% at offshore.
Onsite-heavy revenues also drove below-estimate margins – Gross margin
excluding ESOP costs was 36% (+30bp QoQ), v/s our estimate of 36.7%. EBITDA
margin excluding ESOP charges was 18.2% (+20bp QoQ), but below our estimate
of 18.8%.
Exhibit 2: EBITDA margin was below estimate even before
ESOP charges
EBITDA Margin (%)
5.6
0.3
110.0
102.0
114.9
114.5
121.3
19.3
23.7
23.8
22.5
19.2
16.7
18.0
19.9
17.8
17.1
18.4
16.9
17.4
17.5
19.6
SG&A (%)
19.3
17.5
17.9
17.8
Exhibit 1: Revenue grew above estimate on onsite ramp
USD Revenue (m)
6.5
4.3
1.8
1.8
-0.4
0.7
94.8
1.3
95.8
98.8
100.1
-4.3
Growth - QoQ (%)
7.8
4.1
15.7
92.8 92.4 94.1
Source: MOSL, Company
Source: MOSL, Company
Exhibit 3: Top client continues to contribute more than its
fair share to growth
Rev from top client - USD m (LHS)
17.8
6.9
14.4
13.5 13.7
1.2
(6.5) (6.3)
15.8
QoQ Gr - % (RHS)
Exhibit 4: Revenues shifted onsite by 360bps in the last two
quarters, utilization dropped 150bp, both hurting margins
Utilization (%)
70.6
71.8
70.9
47.5
47.65
46.4
74.6
46.7
47.1
72.9
70.8
45.2
43.8
Offshore revenues (%)
70.3
73.0
42.4
41.1
73.6
72.1
38.8
13.2
15.9
7.7
0.3
6.3
12.2 13.1 15.4
17.1 17.1 18.2
Source: MOSL, Company
Source: MOSL, Company
5 August 2015
2

Hexaware Technologies
PAT grew 19% QoQ to INR989m, but was below our estimate of INR1082m,
mainly on account of ESOP charges (INR80m) and higher effective tax rate of
23.5%, v/s estimate of 22.5%. ETR expanded 200bp QoQ, to 23.4%. This may
remain high, as 40bp came from surcharge increase in India and remainder from
one SEZ moving to 50% tax exempt bracket from 100%.
Payout remained healthy, at 61% (Dividend of INR2 per share). This incidentally,
however, is the lowest payout in 7 quarters.
Capital expenditure in 1HCY15 stands at USD8m, compared to full year outlay of
USD35m. It should go up in 2HCY15, mainly on investments in facilities SiruSeri
and Pune facilities.
Segment-wise performance: Broad based excluding Enterprise solutions
and APAC
Growth was led by Americas (5.7% QoQ, 22.5% YoY) and Europe (8% QoQ,
12.4% YoY). APAC was sluggish (-2% QoQ, -6.3% YoY). Weakness in APAC has
been mainly due to lack of focus on small deals. This should change over the
medium term with the company’s changed strategy.
Among services, IMS surged 17.4% QoQ (17.2% YoY), followed by BPO (14.9%
QoQ and 52.9% YoY). Larger services like ADM (+6.4% QoQ and 24.1% YoY) and
Testing (+6.3% QoQ and 24.7% YoY) too grew above company average.
Enterprise solutions was the only weak segment during the quarter among
services – it is exposed the most to movement to the cloud. As a consequence,
revenues from the segment are down from USD19m in 2QCY14 to USD17m in
the current quarter. Excluding the same, revenue growth during the quarter was
26.3% YoY.
Among verticals, BFSI grew 3.6% QoQ and 31% YoY, while remaining verticals
grew between 11-14% YoY.
Exhibit 5: Only Enterprise Solutions (EAS) was soft during the quarter
Services
ADM
EAS
Testing
BI & Analytics
BPO
IMS
Total
Contr to Rev. (%)
37.8
14.3
20.9
15.1
5.2
6.7
100.0
Growth - QoQ (%)
6.1
-2.6
6.6
3.5
14.4
17.9
5.6
4 Qtr CQGR (%)
5.5
-2.2
5.7
5.9
11.5
3.7
4.4
5 August 2015
3

Hexaware Technologies
Exhibit 6: All verticals grew 4.5%+ in 2QCY15
Verticals
Banking and Capital Markets
Healthcare and Insurance
Travel and Transportation
Emerging Segments
Contr to Rev. (%)
36.7
17.4
15.7
30.2
Growth - QoQ (%)
3.6
11.3
6.2
4.5
4 Qtr CQGR (%)
6.9
3.1
2.7
3.3
Source: Company, MOSL
Exhibit 7: APAC continues to remain sluggish, traction in Americas and Europe
Geographies
Americas
Europe
RoW
Contr to Rev. (%)
81.0
13.4
5.6
Growth - QoQ (%)
5.8
8.0
(3.1)
4 Qtr CQGR (%)
5.2
2.9
(1.6)
Source: Company, MOSL
Top 2-5 Clients (11.2% QoQ) again drove growth during the quarter, on the back
of 11.5% in the previous quarter. Even the top client rebound with 6.3% QoQ
growth, on the back of a flattish 1Q. 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 6-10 accounts have been flattish.
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. (%)
15.0
29.4
11.7
Growth - QoQ (%)
6.3
11.2
-2.7
4 Qtr CQGR (%)
7.4
9.9
0.8
Source: MOSL, Company
5 August 2015
4

Hexaware Technologies
Takeaways on strategic direction from Analyst Meet
Disrupt in Enterprises|Full services in Mid-markets
Go-to-market approach
HEXW is adopting a two-pronged approach to win business in the market
1. In large enterprises, it is only bidding for deals where it can play the disruptor
through cannibalization by providing savings of 50% or more. Automation is a
key tool towards this end, and
2. HEXW will continue to be a full service operator for the mid-market segment.
The exception to this strategy is the AMC segment within the BFSI vertical, where it
is the leader and will be a full services provider to the Enterprises as well. It is
targeting accounts where renewal is due in 12-24 months and separate highly
empowered hunting teams are being set off to chase the same.
4 themes to the strategy
HEXW’s Data-2-Digital roadmap will be executed through 4 key themes
1.
Harnessing the power of Data:
Data is biggest challenge and opportunity for
customers. Clients are still at a stage where they are only trying to figure how
much of unstructured data is relevant.
2.
Application and infrastructure modernization:
Today, 36% of applications are
on legacy, ~44% packages and 20% SaaS. In three years time, 60% of
applications will be on SaaS. This requires modernization of existing
infrastructure.
3.
Process harmonization:
Getting Digital-ready is creating a multi-cloud, multi-
vendor, multi-partner environment which is increasingly disparate too in many
cases. There needs to be an overlay of harmonizing processes and giving a
unified view of the same
4.
Digitalization:
Focus on the employees and end consumer of HEXW’s customer
and other elements of the ecosystem like Suppliers.
Will play aggressively on cannibalization
Over the last 10 years, bandwidth costs reduced 40x, processing costs 60x and
storage costs by as much as 80x. Against that, cost of operations has reduced only
2x. HEXW predicts that over the next 5 years, cost of operations will go down by
10x. Lights-on operations will move away from being people centric to becoming
platform-centric. ~60% of the employees in most accounts are fresher campus
graduates. This layer will be completely automated, in HEXW’s proposed offerings.
Change in estimates
Following an impressive revenue beat, led by broad-based traction, we have
upgraded our CY15/16 USD revenue estimates by 1.9%/2.3%.
However, our EBITDA margin estimates are down 100bp/40bp for CY15/16
mainly to factor ESOP charges under the newly announced RSU scheme.
Our EPS estimate are up 1% despite revenue 2% upgrade due to: [1] Lower
EBITDA margin estimate and [2] Higher effective tax rate going forward.
5 August 2015
5

Hexaware Technologies
Exhibit 9: Change in estimate
Revised
CY15E
CY16E
INR/USD
USD Revenue (m)
USD rev growth (%)
EBITDA Margin (%)
EPS (INR)
63.3
493.5
16.9
17.4
13.6
63.9
572.8
16.1
18.8
17.1
Earlier
CY15E
63.2
484.6
14.7
18.4
13.5
CY16E
63.9
559.9
15.5
19.2
16.9
Change
CY15E
CY16E
0.2%
0.0%
1.9%
2.3%
210bp
50bp
-100bp
-40bp
0.9%
1.1%
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. Strong traction in top-5 accounts
has driven strong revenue traction in the past 5 quarters (USD revenue CQGR of
4.8%). At 56% revenue concentration from top-10 accounts, that remains a risk
going forward too.
The base effect coming from the drop in 1QCY14 revenues sets HEXW well for
industry leading growth in CY15 given lower ask rate and a strong exit. However,
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. While the pipeline is in place, sustained closure
over quarters remains to be seen.
A key factor for HEXW’s growth through large deals was the company’s
stronghold in PeopleSoft. However, cloud models like Workday and
SuccessFactors have increasingly been gaining share – denting the foot-in-the-
door opportunity lent by implementation of PeopleSoft across multiple clients.
We expect HEXW to grow its USD revenues at a CAGR of 16.5% and EPS at a
CAGR of 26.7% during the period from CY14-16. The stock trades at 21.1x CY15E
and 16.6x CY16E EPS. Expectation of strong revenue growth and stable margins,
combined with 60%+ dividend payout and strong RoE make a case of higher
multiple. However, the offsetting factor is the risk from client concentration and
slowdown in large deal wins. Our target price of INR255 discounts CY16E EPS by
15x, which implies 10% downside. Maintain
Sell.
Our stance would change on
return of large deal wins, consistent execution and broad based growth.
Key triggers
Large deal wins
Continued 5%+ trajectory in quarterly revenue growth
Offshore shift lever to margins
Key risks
5 August 2015
Lower margins due to investments
Setback in business from one / more of the top clients
6

Hexaware Technologies
Prolonged sluggishness in foot-in-the door access amid challenging PeopleSoft
prospects.
Exhibit 11: HEXW 1-year forward PB chart
Min(x)
8.0
6.0
4.0
2.5
0.3
PB (x)
Peak(x)
Avg(x)
6.7
Min(x)
6.1
Exhibit 10: HEXW 1 year forward PE chart
PE (x)
500
400
300
200
100
0
24.0
2.3
18.5
Peak(x)
407.9
Avg(x)
2.0
0.0
Source: Company, MOSL
Source: Company, MOSL
Exhibit 12: Comparative Valuation
Company
Mphasis
Mindtree
KPIT Tech
Hexaware
Persistent Sys.
Mkt cap
(USD b)
1.4
1.7
0.4
1.3
0.9
Rating
Neutral
Neutral
Neutral
Sell
Neutral
TP (INR)
435
1,250
125
225
665
Upside
(%)
1.4
-3.1
-3.0
-20.7
-2.1
EPS (INR)
FY16E FY17E
35.8
38.2
70.6
88.5
9.7
13.3
13.6
17.1
37.6
47.4
P/E (x)
RoE (%)
FY16E FY17E FY16E FY17E
12.0
11.2 13.4
13.6
18.3
14.6 26.9
28.0
13.3
9.7 13.9
16.3
20.8
16.6 30.2
35.2
18.1
14.3 20.1
22.0
FY15-17E CAGR (%)
USD rev.
EPS
4.6
8.8
15.4
17.7
4.4
5.9
16.5
26.7
16.0
14.2
Source: Company, MOSL
5 August 2015
7

Hexaware Technologies
Story in charts
Exhibit 13: Top client buckets have remained flattish…
USD1m+
USD10-20m
2
3
7
40
52
CY11
5
3
7
40
55
CY12
5
USD1-5m
USD20m+
4
7
39
55
CY13
USD5-10m
3
5
13
40
61
CY14
7.7
231.1
CY10
308.1
CY11
364.4
CY12
CY13
CY14
18.3
387.8
6.4
8.9
Exhibit 14: …on slowdown in large deal wins, dragging
revenue growth
Revenue (USD m)
33.3
422.3
Growth (%)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 15: Commoditized Services have grown the fastest
CY11-14 Services CAGR
37.4
Exhibit 16: Client concentration risk has driven volatility in
revenues…
Top-10 clients
Revenue (USD m)
Growth (%)
18.0
6.9
9.2
15.9
48.1
18.2
0.6
205.6
217.8
9.3
Remote
IMS
107.5
CY10
159.2
CY11
188.1
CY12
CY13
5.9
CY14
ADM
EAS
Testing
BI/BA
BPO
Source: Company, MOSL
Source: Company, MOSL
Exhibit 17: …and also in margins
EBITDA margin (%)
22.9
21.6
19.3
16.9
23.7 23.8
22.5
19.2
16.7
18.0
19.9
17.8 17.1
Exhibit 18: Cash returning to shareholders – dividend payout
continues to be remain healthy
Dividend (including Tax) - INR m
2,983
415 417 417 489
721 576 848 903 728 729
0
Source: Company, MOSL
Source: Company, MOSL
5 August 2015
8

Hexaware Technologies
Exhibit 19: Change in estimates
2QCY13
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
35.5
19.5
15.9
29.1
100
3QCY13
35.8
18.8
16.3
29.1
100
4QCY13
36.3
18.6
16.7
28.4
100
1QCY14
32.3
18
17.5
32.2
100
2QCY14
33.4
18.3
16.8
31.5
100
3QCY14
36.3
16.1
15.9
31.7
100
4QCY14
36.9
15.6
15.5
32
100
1QCY15
37.4
16.5
15.6
30.5
100
2QCY15
36.7
17.4
15.7
30.2
100
38.1
29.0
13.0
10.2
4.3
5.4
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
67.1
26.3
6.6
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
52.5
47.5
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
95.6
219
14
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
13.8
37.9
53.1
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
53
37
8
5
47
63
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
62
42
11
4
62
43
10
5
47
51
47
74
63
77
Source: MOSL, Company
5 August 2015
9

Hexaware Technologies
Exhibit 20: Change in estimate
2QCY13
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
3QCY13
4QCY13
1QCY14
2QCY14
3QCY14
4QCY14
1QCY15
2QCY15
19
73
92
2
6
100
8700
70.9
11
59
57
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
4.0
0.2
0.1
-2.3
0.7
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
1.3
0.4
9.1
-6.6
0.7
-4.6
0.7
-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
1.2
0.7
-3.6
0.7
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
6.9
2.0
6.3
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
0.3
6.3
9.8
11.5
11.2
-2.7
3.3
-2.7
Source: MOSL, Company
5 August 2015
10

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 (%)
Income statement
Y/E December
Profit & Loss
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
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
63.3
494
11,602
1,586
42,540
74.3
CY16E
63.9
573
13,309
1,707
43,042
76.1
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)
(INR Million)
CY15E
CY16E
31,231
21.0
20,019
5,519
5,693
18.2
464
334
5,563
1,209
21.7
4,355
-
4,355
30.7
36,611
17.2
23,195
6,224
7,192
19.6
487
294
6,998
1,536
21.9
5,462
-
5,462
25.4
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
13,666
14,269
313
14,582
10,713
3,283
7,430
12,041
4,328
4,610
3,103
5,156
725
4,431
6,885
267
14,582
CY16E
603
14,320
14,923
313
15,236
11,313
3,770
7,543
12,128
5,021
3,508
3,599
4,702
725
3,977
7,426
267
15,236
5 August 2015
11

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 Turnover (x)
CY10
2.1
2.9
33.5
3.0
137.9
CY11
8.9
9.9
34.4
4.0
43.9
31.8
28.7
29.2
5.3
8.2
1.4
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
26.0
23.7
19.3
4.0
7.0
1.9
29.3
30.5
68
4.0
CY13
12.6
13.9
39.9
11.1
85.8
22.5
20.4
15.0
3.4
7.1
3.9
31.6
33.9
52
3.9
CY14
10.6
12.1
42.9
8.5
77.4
26.6
23.4
16.4
3.0
6.6
3.0
25.7
28.2
52
3.8
CY15E
13.6
15.2
47.4
9.3
66.1
20.8
18.7
14.5
2.5
6.0
3.3
30.2
28.3
51
4.4
CY16E
17.1
18.7
49.6
12.0
68.4
16.6
15.2
11.6
2.2
5.7
4.2
35.2
33.7
50
4.9
Cash Flow Statement
Y/E December
CF from Operations
Cash for Working Capital
Net Operating CF
Net Purchase of FA
FCF
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
4,838
(1,187)
3,651
(981)
2,670
159
(822)
1
19
(3,372)
(522)
4,939
(522)
4,610
(INR Million)
CY16E
5,507
(1,643)
3,864
(600)
3,264
179
(421)
-
-
(4,375)
(933)
4,610
(933)
3,508
5 August 2015
12

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 21: Sensex rebased
Exhibit 22: Shareholding pattern (%)
Jun-15
Promoter
DII
FII
Others
71.4
4.3
14.1
10.3
Mar-15
71.4
4.3
13.8
10.5
Jun-14
63.8
2.2
22.8
11.2
Exhibit 23: Top holders
Holder Name
Cartica Capital Ltd
HDFC Trustee Company Ltd A/c HDFC
Government Pension Fund Global
% Holding
3.6
1.6
1.6
Note: FII Includes depository receipts
Exhibit 24: Top management
Name
Atul K Nishar
P R Chandrasekar
R Srikrishna
Ashok Harris
Rajesh Kanani
Designation
Chairman
Vice Chairman
CEO
President, Global Delivery
CFO & SVP Corporate Finance
Exhibit 25: Directors
Name
Atul K Nishar
P R Chandrasekar
Bharat Shah
Dileep Choksi
R Srikrishna
Name
Basab Pradhan
Jimmy Mahtani
Christian Oecking*
Kosmo Kalliarekos
Jack Hennessy
*Independent
Exhibit 26: Auditors
Name
Deloitte Haskins & Sells LLP
KPMG
Type
Statutory
Internal
Exhibit 27: MOSL forecast v/s consensus
EPS
(INR)
CY15
CY16
MOSL
forecast
13.6
17.1
Consensus
forecast
13.1
15.6
Variation
(%)
3.9
9.4
5 August 2015
13

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