Hexaware Technologies share price will in focus on Monday after the company conducted its analyst meet and shared its strategy to focus on achieving higher revenue growth over margin expansion.
The company has identified six net new AI TAM opportunities reducing tech debt, vulnerabilities, SaaS license costs and AΙ opportunities around data, governance and cybersecurity. Its management expects 20-25% gross deflation in traditional IT services over the next four years, and noted some of that impact is already in the current base of revenues.
Against that, the company is focused on building new revenue streams through Zerovity, an Al delivery layer that unifies context across an enterprise application estate and coordinates modernisation, automation and migration.
Hexaware identified legacy modernisation, cyber-security, services as software, and data readiness for Al as key new revenue streams and has sized these opportunities at +$300 billion, brokerage firm HSBC noted.
Under its Al pivot, management has committed to launching one Al service every month and also stated that +50% of its current revenues are already Al-infused (and 5% Al-native), suggesting the transition is underway.
According to HSBC, proactive, solution-led approach has aided large-deal conversion at mid-tier peers such as Persistent and Coforge, and Hexaware appears reasonably positioned as well given its strong enterprise footprint and strong account mining.
Noting that Hexaware Technologies has a strong client profile and capabilities, the brokerage firm maintained its ‘Hold' rating on the stock due to near-term weakness in business. It has a share price target of Rs 575 apiece, based on target PE multiple of 20x applied to CY27e EPS estimate of Rs 28.4. Its target PE multiple is similar to that of LTM as the brokerage firm expects Hexaware to recover to a similar growth profile as of LTM.
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CLSA said Hexaware Technologies' target is to grow by 10% YoY by end-FY27 with no great medium- to long-term revenue growth visibility but with stable margins.
Hexaware has delivered a 12.5% US dollar revenue growth CAGR over the last 12 years under the current CEO despite deflationary impact in their core IMS business, CLSA said.
The brokerage firm reiterated its ‘Outperform' and maintained its target price of Rs 730 apiece, on this challenger.
CLSA estimates CY26-28CL US dollar revenue, Ebit and EPS CAGR of 11.2%, 12% and 15.8%, respectively.
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