March'14 Quarter : Hexaware Technologies Posts Disappointing Performance

Hexaware Technologies, a global IT, BPO and consulting services company, posted poor performance for its first quarter of year 2014 (the company follows calendar year as its financial year). The result was announced today (April 29, 2014) during the market hours, after which its stock price dropped by 11% and closed at Rs 153.

Hexaware Technologies net sales in Mar'14 quarter dropped by 5% on Q-o-Q basis, stood at Rs 589 crore. As per the company, the primary reason for revenue decline is closure of some of the projects along with the budget re-allocation to other initiatives on client side.

On vertical front, except travel & transportation and emerging segment which showed muted growth, its other two segments viz. banking & financial and health & insurance showed a downturn during Q1FY14 on sequential basis. Further, on geographical front, income from its major market – America (64% of sales) has dropped by 1.5%, while it showed a soft improvement in income from Europe and Asia Pacific markets.

EBITDA of Hexaware Technologies dropped by 19% on Q-o-Q basis and came in at Rs 113 crore due a significant rise in operating expenses primarily the employee cost, as well as due to the drop in revenue during March quarter 2014. Moreover, bottomline also declined by 31% to Rs 70 crore in the similar period. EBITDA and net margin too showed a steep decline by 324 basis points to 19.24% and 471 basis points to 11.94% respectively. The company added 11 new clients during Q1FY14 across all its key focus areas.

Commenting on the Q1FY14 performance, P R Chandrasekar, CEO and Vice Chairman of Hexaware Technologies said, “Though the quarter was soft, we expect a healthy growth in revenue in Q2 2014 on the back of visibility from existing customers and strong deal pipeline.”