Hexaware Technologies Ltd. (NSE:HEXW) (HTL), a leading AI-driven digital and technology services company, is set to make its stock market debut with an INR 8,750 crore initial public offering (IPO). The offering, which is entirely an Offer for Sale (OFS), will be open for subscription from February 12 to February 14, 2025, with a price band of INR 674–INR 708 per share. Post-listing, HTL’s market capitalization is expected to reach INR 43,024.78 crore.
A Pioneer in AI-First Digital Transformation
HTL has carved a niche in the global tech industry with an AI-driven approach embedded into its suite of platforms, including RapidX™ for digital transformation, Tensai® for AI-powered automation, and Amaze® for cloud adoption. With operations spanning the Americas, Europe, and APAC, HTL serves a diverse clientele, including 31 Fortune 500 companies, across six key industries: Financial Services, Healthcare & Insurance, Manufacturing & Consumer, Hi-Tech & Professional Services, Banking, and Travel & Transportation.
Robust Financial Growth & Strong Market Position
HTL’s financial performance has been impressive, with revenue from operations growing at a CAGR of 13.7% (USD terms) from FY21 to FY23, outpacing the global outsourced IT-BP services industry's 7.3% CAGR in the same period. The company reported a net profit of INR 997.60 crore on revenue of INR 10,389.10 crore in CY23, continuing its growth momentum with a net profit of INR 853.30 crore on revenue of INR 8,871.30 crore for the first nine months of CY24.
With an average EPS of INR 15.18 and RoNW of 23.2% over the past three fiscals, HTL has demonstrated consistent profitability. However, the IPO’s pricing at a P/E of 37.82 based on CY24 annualized earnings suggests a fully valued offering compared to its listed peers like Persistent Systems (NSE:PERS) (P/E 73.9), Coforge (NSE:COFO) (P/E 75.1), LTIMindtree (NSE:LTIM) (P/E 38.5), and Mphasis (NSE:MBFL) (P/E 33.0).
IPO Details & Market Outlook
HTL’s IPO comprises 123.59 million equity shares, with a reservation of INR 90 crore worth of shares for eligible employees at an INR 67 discount per share. The company has allocated 50% of the issue for QIBs and 15% for retail investors. Despite the IPO being a secondary issue, HTL’s strong market position and track record of dividend payments (400% in CY21, 1100% in CY22, 875% in CY23) add to its appeal.
Investment Perspective
HTL’s AI-first strategy, steady financial growth, and global footprint make it an attractive long-term investment. While the IPO appears fully priced, investors with a medium to long-term outlook may find value in this dividend-paying technology leader as it continues to expand its AI-driven capabilities.
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