Hexaware Technologies IPO opens next week: From risks to financials — 10 key things to know from RHP

Hexaware Technologies IPO: The initial public offer (IPO) of Hexaware Technologies is set to hit the primary market next week on Wednesday, February 12. The price band for Hexaware Technologies IPO has been fixed in the range of ₹674 to ₹708 per equity share of the face value of Re 1.

In the offer, 50% of the shares in the public issue are reserved for qualified institutional buyers (QIB), 15% for non-institutional Institutional Investors (NII), and 35% of the offer is reserved for retail investors. A discount of ₹67 apiece is being offered to eligible employees bidding in the employee reservation portion, and equity shares aggregating up to ₹900 million is reserved for employees.

Key Things About Hexaware Technologies IPO

Here are key things to know about Hexaware Technologies IPO from the RHP:

Key Dates

Hexaware Technologies IPO will open for subscription on February 12 and close on February 14. The anchor investor date is set a day prior to the IPO i.e. February 11.

Structure & Size

The IPO is entirely an offer for sale (OFS) of 12.36 crore shares of the company by the promoter-selling shareholder, who is looking to raise ₹8,750 crore via the share sale at the upper price band.

Objective

Hexaware Technologies’ IPO has no fresh share sale component. The entire offer is an offer for sale. Therefore, the company will not receive any proceeds from the offer. The company wants to list the equity shares to enhance visibility and brand and provide liquidity to its existing shareholders.

Financials

Hexaware Technologies reported a 13% year-on-year (YoY) jump in revenue from operations to ₹10,380 crore in 2023 from ₹9,199.6 crore in the previous year. Similarly, the PAT also jumped 13% YoY to ₹997.6 crore in 2023 over ₹884.2 crore in 2022.

Competitors

Persistent Systems, Coforge, LTIMindtree and Mphasis are the listed peers of Hexzware Technologies as per the company’s RHP filing.

Strengths

The company serves a diverse customer base, including 31 Fortune 500 companies. In FY 2023, it derived approximately 62% and 83% of its revenue from clients with annual revenues exceeding US$5 billion and US$1 billion, respectively. It has posted consistent revenue growth, improving margins, and strong cash generation.

It is led by an experienced management team, and the company’s global workforce of 32,536 employees is committed to driving growth. The team’s significant industry expertise strengthens the company’s leadership.

Risks

The company’s revenue from operations is concentrated in the Americas and Europe. It derived 73.4% and 71.5% of revenue from operations from the Americas and 20.5% and 22.1% of revenue from operations from Europe for the nine months ended September 30, 2024 and the Financial Year 2023, respectively. Any adverse changes in economic conditions that negatively affect these two geographies and markets can impact the company’s financial health.

The company’s business depends on the ability to attract and retain highly skilled professionals. If it fails to attract, retain, train and optimally utilise these professionals, the business may be unable to grow and profitability could decline.

Changes in laws regarding privacy, data protection, and related matters, which could lead to claims, changes in business practices, penalties, increased operational costs, or a decline in customer growth or engagement pose risks to the company.

Industry Overview

The IT services and Business Process Services market is projected to reach approximately ₹343.0 trillion in CY2029, with IT services growing at a CAGR of approximately 7.2% and BPS growing at a CAGR of approximately 2.5% for the period CY2024-29E. Factors driving such growth include increased adoption of cloud, data, and AI solutions, heightened cybersecurity needs, and cost optimization. Digital is an overarching theme across all major technology segments in today’s market, with overall digital services spend set to reach approximately ₹152.7 trillion by CY2029, according to Everest Report.

Company Overview

Hexaware Technologies is a global digital and technology services company with a focus on artificial intelligence (AI).

The company operates across six key industry segments — Financial Services, Healthcare and Insurance, Manufacturing and Consumer, Hi-Tech and Professional Services, Banking, and Travel and Transportation. It offers five core services: Design & Build, Secure & Run, Data & AI, Optimize, and Cloud Services.

It has a global delivery presence comprising 39 delivery centres supported by 16 offices spread across the Americas, Europe and APAC as of September 30, 2024. As of September 30, 2024, it had a team strength of 32,536,315 employees in 28 countries.

Book-running Lead Managers

Kotak Mahindra Capital Company, Citigroup Global Markets India, J.P. Morgan India, HSBC Securities & Capital Markets Pvt Ltd, and IIFL Securities are the book-running lead managers of the Hexaware Technologies IPO, while Kfin Technologies Limited is the registrar for the issue.