BSE Code: | NSE Code: | ISIN: | Sector:
Research Report Detail
|Report Date||Call||Price@Call||Target Price
|Current Status||Time Horizon|
|Target Hit|| Long (1Y)
Nomura maintains neutral on Hexaware Technologies
Technologies outperformed 2Q growth expectations, and could be the
fastestgrowing player in our IT coverage, with USD revenue/EPS CAGR of
12/10% over FY16-18F. Strength in IMS BPO (annuity segments which
contributed 41% of incremental revenue over LTM) and BFSI (largest
vertical for HEXW) are positive from longer-term growth sustainability
perspective in our view.
However, investors should await better entry points given: 1) flattish revenue trends in 2H and impacts on FY18F growth due to insourcing at a top client and ramp-down at another top client and 2) the stock seems fairly valued at around 15.8x 1-yr fwd earnings (around 15% premium to historical average). We lift our TP to INR260. HEXW remains our relative preference in Tier 2 IT. HCLT (TP: INR1030, implied upside 15.35%) is our only Buy in the IT services sector.