Hexaware Technologies Net Income surged on 19.2% and EBITDA Margin showed almost no change
07-02-2018 • About Hexaware Technologies (
$HEXAWARE) • By InTwits
Hexaware Technologies reported 2017 financial results today. Here are the key drivers of the company's long term financial model:
- Hexaware Technologies is a fast growth stock: 2017 revenue growth was 11.5%, 5 year revenue CAGR was 15.1% at 2017 ROIC 33.5%
- Hexaware Technologies has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's in pair with industry average of 3.2%
- CAPEX is quite volatile: ₹957m in 2017, ₹2,223m in 2016, ₹1,367m in 2015, ₹604m in 2014, ₹411m in 2013
- The company has highly profitable business model: ROIC is 33.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 11.5%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.9 pp from 8.5% to 13.4% in FY2017. EBITDA Margin declined at -1.4 pp per annum in 2013-2017.
Net Income margin increased slightly on 0.81 pp from 11.9% to 12.7% in 2017.
Investments (CAPEX, working capital and M&A)
In 2017 Hexaware Technologies had CAPEX/Revenue of 2.4%. CAPEX/Revenue showed almost no change from 2014 to 2017. Average CAPEX/Revenue for the last three years was 4.4%. During the last 5 years CAPEX as a % of Revenue topped in 2016 at 6.3%.
Return on investment
The company operates at high and attractive ROIC (33.5%) and ROE (26.7%). ROIC showed almost no change in 2017. ROE showed almost no change in 2017.
Leverage (Debt)
The company has no debt. Cash jumped on 88.5%.
Management team
Hexaware Technologies's CEO R Srikrishna "Keech" has spent 6 years with the company.
Financial and operational results
FY ended 31-12-2017
Hexaware Technologies ($HEXAWARE) key annual financial indicators| mln. INR | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 22,853 | 25,817 | 31,235 | 35,349 | 39,420 | 11.5% |
| SG&A | | | 151 | | | |
| EBITDA | 5,130 | 4,776 | 5,358 | 5,764 | 6,552 | 13.7% |
| Net Income | 3,791 | 3,202 | 3,932 | 4,192 | 4,995 | 19.2% |
Balance Sheet
|
|---|
| Cash | 1,226 | 2,865 | 3,862 | 2,731 | 5,147 | 88.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 411 | 604 | 1,367 | 2,223 | 957 | -57.0% |
Ratios
|
|---|
| Revenue growth | 17.3% | 13.0% | 21.0% | 13.2% | 11.5% | |
| EBITDA growth | 26.9% | -6.9% | 12.2% | 7.6% | 13.7% | |
|
|---|
| EBITDA Margin | 22.4% | 18.5% | 17.2% | 16.3% | 16.6% | 0.3% |
| SG&A, % of revenue | | | 0.5% | | | |
| Net Income Margin | 16.6% | 12.4% | 12.6% | 11.9% | 12.7% | 0.8% |
| CAPEX, % of revenue | 1.8% | 2.3% | 4.4% | 6.3% | 2.4% | -3.9% |
|
|---|
| ROIC | 39.2% | 34.7% | 35.7% | 33.8% | 33.5% | -0.3% |
| ROE | 31.6% | 25.7% | 28.9% | 26.4% | 26.7% | 0.2% |
| Net Debt/EBITDA | -0.2x | -0.6x | -0.7x | -0.5x | -0.8x | -0.3x |
Peers in IT Consulting & Software
Below you can find Hexaware Technologies benchmarking vs. other companies in IT Consulting & Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| 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 ($TECHM) | 25.2% | 174.0% | 20.1% | 17.1% | - |
| |
|---|
| Median (24 companies) | 20.4% | 14.0% | 8.1% | 9.1% | -9.6% |
|---|
| Hexaware Technologies ($HEXAWARE) | - | 13.0% | 21.0% | 13.2% | 11.5% |
Top companies by Gross margin, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Tata Consultancy Services ($TCS) | - | 47.4% | 42.4% | 43.9% | - |
| Infosys ($INFY) | 98.1% | 35.9% | 38.3% | 37.4% | - |
| Mindtree ($MINDTREE) | 36.2% | - | 34.8% | 32.4% | - |
| Wipro ($WIPRO) | 30.4% | 32.0% | 31.6% | 30.4% | - |
| |
|---|
| Median (4 companies) | 36.2% | 35.9% | 36.6% | 34.9% | - |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Oracle Financial Services Software ($OFSS) | 35.2% | 37.4% | 39.7% | 41.1% | - |
| Tata Consultancy Services ($TCS) | 28.6% | 30.7% | 26.1% | 28.2% | - |
| Infosys ($INFY) | 27.9% | 26.3% | 27.1% | 27.1% | - |
| Wipro ($WIPRO) | 20.9% | 22.4% | 22.3% | 21.1% | - |
| Ramco Systems ($RAMCOSYS) | -2.8% | 4.9% | 18.8% | 20.3% | - |
| |
|---|
| Median (23 companies) | 16.5% | 18.0% | 12.3% | 13.6% | -57.3% |
|---|
| Hexaware Technologies ($HEXAWARE) | 22.4% | 18.5% | 17.2% | 16.3% | 16.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Ramco Systems ($RAMCOSYS) | 22.1% | 15.3% | 12.4% | 10.3% | - |
| Niit Technologies ($NIITTECH) | 4.6% | 6.1% | 7.9% | 6.0% | - |
| Financial Technologies (India) ($FINANTECH) | 11.4% | - | 6.5% | 5.4% | 9.2% |
| Infosys ($INFY) | 5.2% | 5.5% | 4.2% | 4.4% | - |
| Cyient ($CYIENT) | 3.9% | 3.5% | 3.0% | 4.2% | - |
| |
|---|
| Median (19 companies) | 3.2% | 3.2% | 3.0% | 2.7% | 9.2% |
|---|
| Hexaware Technologies ($HEXAWARE) | 1.8% | 2.3% | 4.4% | 6.3% | 2.4% |
Top companies by ROIC, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Oracle Financial Services Software ($OFSS) | 16.8% | 16.3% | 24.2% | 45.7% | - |
| Tata Consultancy Services ($TCS) | 48.4% | 50.2% | 40.5% | 44.4% | - |
| Sqs India Bfsi ($SQSBFSI) | 27.0% | 29.4% | 30.6% | 39.9% | - |
| Mindtree ($MINDTREE) | 34.6% | 36.2% | 32.0% | 28.9% | - |
| Infosys ($INFY) | 28.3% | 27.2% | 25.1% | 25.3% | - |
| |
|---|
| Median (31 companies) | 20.1% | 22.3% | 19.4% | 18.9% | -4.3% |
|---|
| Hexaware Technologies ($HEXAWARE) | 39.2% | 34.7% | 35.7% | 33.8% | 33.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Agc Networks ($AGCNET) | 10.1x | - | 4.6x | 22.8x | - |
| 3I Infotech ($3IINFOTECH) | 20.3x | 27.7x | 14.7x | 6.8x | - |
| Onward Technologies ($ONWARDTEC) | 2.2x | 4.1x | 1.9x | 1.2x | - |
| Wipro ($WIPRO) | -0.3x | -0.6x | -0.8x | 0.2x | - |
| Asm Technologies ($ASMTEC) | 2.1x | - | 0.0x | 0.0x | - |
| |
|---|
| Median (25 companies) | -0.1x | -0.2x | -0.2x | -0.2x | - |
|---|
| Hexaware Technologies ($HEXAWARE) | -0.2x | -0.6x | -0.7x | -0.5x | -0.8x |
