JM Financial initiates 'Buy' on Hexaware Technologies; sees 10% upside

Hexaware Technologies share price: Brokerage firm JM Financial remains bullish on the D-Street debutant Hexaware Technologies and has initiated coverage with a 'Buy' rating on the stock. Earlier in the day, February 19, 2025, Hexaware Technologies shares, following the completion of its initial public offering (IPO), listed at Rs 745.50 per share on the National Stock Exchange (NSE), and Rs 731 per share on the BSE, against the issue price of Rs 708.  This also marks the return of the company’s shares to the bourses after their delisting in 2020. Valued at approximately Rs 8,750 crore, Hexaware Technologies' IPO became the largest-ever public offering by an Indian IT services company, surpassing the previous record set by Tata Consultancy Services, which went public in 2024.  Meanwhile, the analysts at JM Financial have assigned a target price of Rs 820 for Hexaware Technologies, an upside of 10 per cent from the listing price of the company's shares.   "We value the stock at 30x 24M forward EPS (10 per cent premium to the average of the mid-cap IT basket’s FY26 PER) to arrive at our target price of Rs 820, implying a 16 per cent upside from the upper end of the IPO price band (Rs 674-708). We initiate coverage with a BUY rating. Headwinds in the Top-5, especially Fannie Mae (a top-3 account), could be a key risk to our investment thesis," said Abhishek Kumar and Nandan Arekal from JM Financial in a research note.

 

At around 10:50 AM on Wednesday, February 19, Hexaware Technologies shares were quoted trading at Rs 774.70 per share, up 3.92 per cent from the issue price of Rs 708 on the NSE. In comparison, the benchmark NSE Nifty50 was trading at around 23,032 levels, up 86.90 points or 0.38 per cent.  Also Read: Suven Pharma, Divis, Syngene: Why Macquarie is betting big on Indian pharma

 

Here’s what JM Financial said its brokerage report:

 

Hexaware – scaled yet nimble

According to the brokerage, Hexaware (HEXW) is the 8th largest IT services firm in India with USD 1.4 billion in revenues. Its diversified services span across design, AI, security, and back-end operations, enabling participation in both discretionary and efficiency-driven projects. In industries, four out of six verticals have scaled to USD 200 million+ ARR. With minimal client concentration, analysts believe HEXW’s growth remains resilient even amid slower performance from top clients. 

 

Land, ramp, expand

HEXW follows a 'land, ramp, expand' strategy, focusing on scalable accounts in target industries. Around 83 per cent of its revenue comes from large enterprises, including 31 Fortune 500 companies. This approach, according to analysts, has helped add 130 new USD 1 million+ clients, scaling 23 of them to USD 10 million. "Such consistency in scaling accounts, like we see in the case of Coforge/PSYS, reflects execution rigor and delivery excellence, an oft-underrated pillar of IT Services’ success," said the analysts.

 

Granularity lends consistency

With a 14 per cent compound annual growth rate (CAGR) over the past four years, HEXW's growth, analysts said, has been strong across its top 10 peers despite only 2.2 per cent growth in its top-5 clients. "We expect 12 per cent USD revenue CAGR over CY23-26E, in line with recent trends. One-time expenses – severance costs, acquisition-related, ERP implementation expenses – are unlikely to recur, aiding reported Ebitda margin, although the ESOP 2024 scheme means ESOP charges might rise in CY25. We build these resulting in approximately 150 bps Ebitda margin expansion over CY24-26E," said the analysts.  Also Read: Hexaware Technologies Ltd Share Price Today