Hexaware Q4 net profit halves to ₹100 crore on New Labour Code provisions

Hexaware's December-quarter net profit fell 49 per cent year-on-year to Rs 100 crore due to provisions for the New Labour Code, even as revenue rose over 10 per cent

Mid-tier information technology (IT) services company Hexaware’s net profit nearly halved in the fourth quarter due to provisions made for the New Labour Code in November. Net profit for the quarter ended December stood at Rs 100 crore, down 49 per cent from Rs 197 crore a year earlier.

 

Revenue from operations rose 10.2 per cent to Rs 1,860 crore. On a constant currency basis, which discounts the impact of currency fluctuations, revenue increased 3.5 per cent. The provisions related to the New Labour Code amounted to Rs 103 crore.

 

Shares of the company were down 10 per cent during the day at Rs 621.

 

What weighed on Hexaware’s December-quarter performance? 

“While CY2025 was a challenging year for the industry, we have accelerated deal wins in the later part of the year that sets us up for a better CY2026,” said Chief Executive Officer R Srikrishna.

 

Hexaware said the demand environment was improving and decision-making had become better after a year of uncertainty that weighed on the entire IT industry. It won all deals that were in the pipeline for the fourth quarter, except one major consolidation deal, which is ongoing. While artificial intelligence (AI) is expected to create new business opportunities, it could also act as a dampener for some existing ones.

 

Which segments and regions drove growth? 

Growth in 2026 is expected to be led by banking as well as healthcare and insurance. In the fourth quarter, these segments grew 15.1 per cent and 2.1 per cent, respectively, followed by financial services.

 

“Q1 is a seasonally weak quarter, but we are going through an unusually weak patch due to a number of unrelated one-offs,” the company said.

 

Geographically, growth in the fourth quarter was led by Europe and Asia Pacific, which grew 10.3 per cent and 12.2 per cent, respectively. The Americas, which contribute about 75 per cent to the topline, grew 2.5 per cent.

 

How did margins and cash flows fare? 

Reported earnings before interest, taxes, depreciation and amortisation (Ebitda) margin rose 70 basis points to 17 per cent. “This year, we navigated a challenging macroeconomic environment with disciplined execution, resulting in healthy margin expansion on a year-on-year basis. Our continued discipline on working capital management led to a very healthy cash flow conversion of 75 per cent,” Chief Financial Officer Vikash Jain said in a statement.

 

Hexaware had 33,844 employees at the end of December, with IT voluntary attrition at 11 per cent