Hexaware Technologies CAPEX surged on 62.6% and Revenue surged on 13.2%
02-07-2017 • About Hexaware Technologies (
$HEXAWARE) • By InTwits
Hexaware Technologies reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hexaware Technologies is a fast growth stock: FY2016 revenue growth was 13.2%, 5 year revenue CAGR was 19.5% at FY2016 ROIC 33.8%
- Hexaware Technologies has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.7%. At the same time it's in pair with industry average of 3.4%
- CAPEX is quite volatile: ₹2,223m in FY2016, ₹1,367m in FY2015, ₹604m in FY2014, ₹411m in FY2013, ₹744m in FY2012
- The company has highly profitable business model: ROIC is 33.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Hexaware Technologies's Revenue jumped on 13.2%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 0.85 pp from 17.2% to 16.3% in FY2016. EBITDA Margin stuck to a declining trend at -1.4 pp per annum in the last 5 years.
Net Income margin decreased slightly on 0.73 pp from 12.6% to 11.9% in FY2016. Net Income margin followed a declining trend at -1.4 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 6.3%. The company's CAPEX/Revenue increased on 4.5 pp from 1.8% in FY2013 to 6.3% in FY2016. Average CAPEX/Revenue for the last three years was 4.3%. During FY2012-FY2016 CAPEX as a % of Revenue bottomed in FY2013 at 1.8% and was growing since that time.
Return on investment
The company operates at high and attractive ROIC (33.8%) and ROE (26.4%). ROIC decreased slightly on 2.0 pp from 35.7% to 33.8% in FY2016. ROE decreased on 2.5 pp from 28.9% to 26.4% in FY2016.
Leverage (Debt)
The company has no debt. Cash dropped on 29.3%.
Management team
The company's CEO R Srikrishna "Keech" has spent 6 years with the company.
Financial and operational results
Hexaware Technologies ($HEXAWARE) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 19,482 | 22,853 | 25,817 | 31,235 | 35,349 | 13.2% |
| SG&A | | | | 151 | | |
| EBITDA | 4,041 | 5,130 | 4,776 | 5,358 | 5,764 | 7.6% |
| Net Income | 3,276 | 3,791 | 3,202 | 3,932 | 4,192 | 6.6% |
Balance Sheet
|
|---|
| Cash | 676 | 1,226 | 2,865 | 3,862 | 2,731 | -29.3% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 744 | 411 | 604 | 1,367 | 2,223 | 62.6% |
Ratios
|
|---|
| Revenue growth | 34.3% | 17.3% | 13.0% | 21.0% | 13.2% | |
| EBITDA growth | 54.6% | 26.9% | -6.9% | 12.2% | 7.6% | |
|
|---|
| EBITDA Margin | 20.7% | 22.4% | 18.5% | 17.2% | 16.3% | -0.8% |
| SG&A, % of revenue | | | | 0.5% | | |
| Net Income Margin | 16.8% | 16.6% | 12.4% | 12.6% | 11.9% | -0.7% |
| CAPEX, % of revenue | 3.8% | 1.8% | 2.3% | 4.4% | 6.3% | 1.9% |
|
|---|
| ROIC | 33.5% | 39.2% | 34.7% | 35.7% | 33.8% | -2.0% |
| ROE | 29.5% | 31.6% | 25.7% | 28.9% | 26.4% | -2.5% |
| Net Debt/EBITDA | -0.2x | -0.2x | -0.6x | -0.7x | -0.5x | 0.2x |
Peers in IT Consulting & Software
Below we provide Hexaware Technologies benchmarking against other companies in IT Consulting & Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mindtree ($MINDTREE) | - | 23.2% | 28.8% | 17.0% | 31.8% |
| Ramco Systems ($RAMCOSYS) | - | 7.3% | 9.9% | 37.0% | 24.2% |
| Sqs India Bfsi ($SQSBFSI) | - | 32.9% | 20.4% | 10.1% | 23.4% |
| Infinite Computer Solutions (India) ($INFINITE) | - | 31.7% | 24.6% | 0.3% | 21.3% |
| Tech Mahindra ($TECHM) | - | 25.2% | 174.0% | 20.1% | 17.1% |
| |
|---|
| Median (24 companies) | 35.5% | 20.4% | 14.0% | 8.1% | 9.1% |
|---|
| Hexaware Technologies ($HEXAWARE) | - | 17.3% | 13.0% | 21.0% | 13.2% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Consultancy Services ($TCS) | - | - | 47.4% | 42.4% | 43.9% |
| Infosys ($INFY) | 41.3% | 98.1% | 35.9% | 38.3% | 37.4% |
| Mindtree ($MINDTREE) | 31.5% | 36.2% | - | 34.8% | 32.4% |
| Wipro ($WIPRO) | 29.2% | 30.4% | 32.0% | 31.6% | 30.4% |
| |
|---|
| Median (4 companies) | 32.7% | 36.2% | 35.9% | 36.6% | 34.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oracle Financial Services Software ($OFSS) | 35.3% | 35.2% | 37.4% | 39.7% | 41.1% |
| Tata Consultancy Services ($TCS) | 29.5% | 28.6% | 30.7% | 26.1% | 28.2% |
| Infosys ($INFY) | 31.6% | 27.9% | 26.3% | 27.1% | 27.1% |
| Wipro ($WIPRO) | 19.1% | 20.9% | 22.4% | 22.3% | 21.1% |
| Ramco Systems ($RAMCOSYS) | 9.6% | -2.8% | 4.9% | 18.8% | 20.3% |
| |
|---|
| Median (23 companies) | 15.1% | 16.5% | 18.0% | 12.3% | 13.6% |
|---|
| Hexaware Technologies ($HEXAWARE) | 20.7% | 22.4% | 18.5% | 17.2% | 16.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ramco Systems ($RAMCOSYS) | - | 22.1% | 15.3% | 12.4% | 10.3% |
| Niit Technologies ($NIITTECH) | 5.9% | 4.6% | 6.1% | 7.9% | 6.0% |
| Financial Technologies (India) ($FINANTECH) | - | 11.4% | - | 6.5% | 5.4% |
| Infosys ($INFY) | 4.9% | 5.2% | 5.5% | 4.2% | 4.4% |
| Cyient ($CYIENT) | 5.2% | 3.9% | 3.5% | 3.0% | 4.2% |
| |
|---|
| Median (19 companies) | 3.6% | 3.2% | 3.2% | 3.0% | 2.7% |
|---|
| Hexaware Technologies ($HEXAWARE) | 3.8% | 1.8% | 2.3% | 4.4% | 6.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oracle Financial Services Software ($OFSS) | 18.0% | 16.8% | 16.3% | 24.2% | 45.7% |
| Tata Consultancy Services ($TCS) | 48.6% | 48.4% | 50.2% | 40.5% | 44.4% |
| Sqs India Bfsi ($SQSBFSI) | 12.1% | 27.0% | 29.4% | 30.6% | 39.9% |
| Mindtree ($MINDTREE) | 24.9% | 34.6% | 36.2% | 32.0% | 28.9% |
| Infosys ($INFY) | 32.4% | 28.3% | 27.2% | 25.1% | 25.3% |
| |
|---|
| Median (31 companies) | 19.4% | 20.1% | 22.3% | 19.4% | 18.9% |
|---|
| Hexaware Technologies ($HEXAWARE) | 33.5% | 39.2% | 34.7% | 35.7% | 33.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Agc Networks ($AGCNET) | 0.9x | 10.1x | - | 4.6x | 22.8x |
| 3I Infotech ($3IINFOTECH) | 8.5x | 20.3x | 27.7x | 14.7x | 6.8x |
| Onward Technologies ($ONWARDTEC) | 2.4x | 2.2x | 4.1x | 1.9x | 1.2x |
| Wipro ($WIPRO) | -0.3x | -0.3x | -0.6x | -0.8x | 0.2x |
| Asm Technologies ($ASMTEC) | 1.7x | 2.1x | - | 0.0x | 0.0x |
| |
|---|
| Median (25 companies) | -0.0x | -0.1x | -0.2x | -0.2x | -0.2x |
|---|
| Hexaware Technologies ($HEXAWARE) | -0.2x | -0.2x | -0.6x | -0.7x | -0.5x |
