Hexaware Technologies' Zero License and tokenomics strategy underpin AI-led growth potential

Investment View and Valuation

Motilal Oswal Financial Services reiterated its BUY rating on Hexaware Technologies with a target price of Rs 720, based on 25 times CY27E EPS. Against the report CMP of Rs 533, the target implies potential upside of 35 per cent.

The broker views Zero License and tokenomics as the most differentiated elements of Hexaware's AI strategy. It believes the company's ability to create bottom-up differentiation and monetise AI services is more important than AI-revenue disclosure alone.

Hexaware's Two-Part AI Strategy

Hexaware's AI strategy comprises the Zero Friction Enterprise framework, built around six Zero pillars, and AI for Business, which focuses on solving previously unsolvable problems and entering adjacent markets. Management said that more than 50 per cent of revenue is now AI-infused.

Motilal Oswal considers this progress encouraging, but believes client adoption and monetisation will provide a more meaningful validation of the strategy. Hexaware is testing eight token-cost-based commercial models, including fixed-cost and gain-share structures, and every new proposal carries a token-based option. The broker expects the framework to be validated by client adoption over the next two to three quarters.

Zero License: Rebuilding Software Economics

Zero License seeks to replace recurring SaaS licence spending by rebuilding client workflows and intellectual property on the client's own cloud using AI. The opportunity has expanded beyond low-code platforms to managed services, customer relationship management and embedded vertical platforms. Management indicated that no comparable peer offering had emerged over the preceding eight months.

Motilal Oswal believes the most addressable areas include low-code or no-code platforms, SaaS bolt-ons, platform lock-ins and legacy licensing structures where AI-native alternatives can offer superior economics. The broker regards Zero License as genuinely differentiated but early-stage, with deal wins and revenue conversion as key monitorables.

Around 40 per cent of a CIO's technology budget is spent on software licences, deployment and maintenance. Gartner estimates that nearly USD 234 billion of enterprise software spending could be at risk over time.

Zero Tickets and Infrastructure Modernisation

In infrastructure and application management services, Hexaware's Zero Tickets framework targets autonomous resolution beyond the traditional 30-40 per cent automation ceiling.

In a case study involving a USD 9 billion revenue EPC and energy client, ticket volumes fell to one-third, average resolution time improved from 3.5 hours to 10 minutes, and delivery headcount declined by 60 per cent. Hexaware shared the productivity gains through a 22 per cent contract-price reduction. It subsequently won two additional statements of work for network and security services, lifting revenue from the account by 21 per cent.

Motilal Oswal views this give-back-pricing and win-more-scope model as important to monitor, particularly given an estimated USD 342 billion industry infrastructure-renewal opportunity.

Data Readiness as an AI Enabler

Motilal Oswal views data readiness as an enabling capability within Hexaware's AI strategy rather than as a standalone monetisation opportunity. Management cited data issues as the cause of nearly 60 per cent of failed AI proof-of-concepts.

Hexaware's semantic-layer and knowledge-graph approach aims to reduce deployment time to six to eight weeks, compared with multi-year traditional implementations. Client examples included a 70 per cent reduction in manual scenario modelling and an 85 per cent improvement in time-to-market for an insurance and investment customer.

For a Big Four audit client, Hexaware migrated more than 5,000 Databricks tables in under one year, compared with an estimated 2.5 years, delivering 40-60 per cent efficiency gains.

Growth Outlook and Financial Forecasts

Motilal Oswal estimates constant-currency revenue growth of 6.4 per cent in CY26 and 9.7 per cent in CY27. Growth is expected to be supported by execution improvement, large-account mining and AI-led opportunities. The broker noted that management maintained its margin guidance despite continued investments in AI and talent.

Key Risks and Monitorables

• Zero License may scale slowly, with deal wins and revenue conversion remaining important monitorables.
• Token-based commercial models may not convert into broad client adoption.
• AI-led productivity gains may not translate into sustained revenue expansion.