Hexaware Q1 profit rises 26% to Rs 175 cr; suspends full-year guidance

Net profit rose 26.3 per cent year-on-year at Rs 175 crore while it increased 4.3 per cent on a sequential basis for January-March.

Hexaware Technologies, the Mumbai-based IT and business process management company, on Wednesday reported profit numbers better than analysts expected for the quarter ended March 2020 but withdrew revenue and margin guidance it had given for FY20.

Hexaware's net profit rose 26.3 per cent year-on-year at Rs 175 crore while it increased 4.3 per cent on a sequential basis for the January-March period, according to the company’s exchange filing.

Revenue rose 22 per cent year-on-year to Rs 1,541.8 crore during this period. The numbers remained flat sequentially. Revenues were at $210.6 million, a 1.7 per cent fall in constant currency term over the previous quarter. Operating margin of the mid-tier IT firm contracted 180 basis points sequentially to 11.6 per cent in Q4FY20. The new deal wins during the quarter stood at $ 69 million.

"COVID-19 has led to significant uncertainty in the current environment. In view of this, we suspend the guidance that was provided earlier for FY20," the company said in a statement. It had earlier forecasted revenue growth of 15-17 per cent and EBITDA margins of 15-16 per cent for 2020.

The company acquired US-based digital services firm Mobiquity for $182 million in an all-cash deal in July last year.

“We have been best-in-class in keeping our employees safe and servicing our customers fully during these abnormal times. Our flawless execution has helped us further strengthen our trusted relationships with customers and will help us grow with them during recovery,” said R Srikrishna, CEO & Executive Director, Hexaware Technologies.

The numbers were largely in line with street expectations with a beat on profit front. Edelweiss pegged the profit at Rs 153.2 crore for the quarter while revenue was seen at Rs 1,531.6 crore. "We expect revenues (in cc terms) to decline as the economic slowdown further hits banks and capital market clients," it said in an earnings preview note.

This comes as its larger IT rivals acknowledged the uncertainties arising from the COVID-19 outbreak. Infosys said it was unable to provide guidance on revenues and margins for FY21. TCS cautioned maximum impact of the crisis would be felt during the first quarter of the current financial year (Q1FY21).