Mending Revenue Momentum | Value Research Hexaware Technologies' fortunes have gone downhill in the past year. But is the worst still to come?
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Mending Revenue Momentum

Hexaware Technologies' fortunes have gone downhill in the past year. But is the worst still to come?

It has been pretty much a downhill slide for Hexaware shareholders ever since the company announced its September 2012 results. Revenue growth in that quarter had staggered down to 1.8 per cent (q-o-q) - half the growth recorded in the immediately preceding quarter. The worst though, was still to come.

Subsequent quarters saw revenue growth plunge deeper. In December 2012, Hexaware reported a q-o-q de-growth of 0.4 per cent. March 2013 was slightly better with a growth of 1.7 per cent growth but in June 2013, revenue fell again by 0.9 per cent. The markets have naturally not been enthused.

The company's stock price has languished at the nearly the same levels in the last 12 months. This is a stark contrast to the BSE IT Index which is up 36 per cent during the same period. FII ownership in Hexaware has fallen from 43.38 per cent to 36.21 per cent.

Should you follow the FII route?
It may be just a tad early to write off Hexaware. The company has guided growth of 3.5-5.5 per cent for the Q3CY13 on the back of recently signed deals. According to Kawaljeet Saluja of Kotak Institutional Research, Hexaware could post a runrate of 7 per cent in CY13 and 10.9 per cent in CY14.
Fresh investments are required in service offerings, sales teams and client mining. It's something Hexaware is out to set right. It plans to add 7-8 banking and financial services domain experts in consulting and Business Intelligence. The sales team is about to get a boost with the addition of 8-10 heads of front head sales teams. Finally, the company will intensify its client mining with improved focus on the top 21-50 clients.
How successful the company is able to get over these bottlenecks will determine its momentum ahead. Existing investors should wait and watch how the company navigates its obstacles.




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