Hexaware Technologies revenue jumped on 17.9% and EBITDA Margin decreased slightly on 0.83 pp from 16.6% to 15.8%
30-01-2019 • About Hexaware Technologies (
$HEXAWARE) • By InTwits
Hexaware Technologies reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hexaware Technologies is a fast growth stock: 2018 revenue growth was 17.9%, 5 year revenue CAGR was 15.3% at 2018 ROIC 32.3%
- Hexaware Technologies has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's in pair with industry average of 3.0%
- CAPEX is quite volatile: ₹609m in 2018, ₹957m in 2017, ₹2,223m in 2016, ₹1,367m in 2015, ₹604m in 2014
- The company has highly profitable business model: ROIC is 32.3%
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 17.9%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.6 pp from 19.7% to 12.1% in FY2018. EBITDA Margin declined at -0.60 pp per annum in 2014-2018.
Net Income margin showed almost no change in 2018. The efficient tax rate was 19.7% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.3% in 2018. CAPEX/Revenue decreased on 3.1 pp from 4.4% in 2015 to 1.3% in 2018. It's average CAPEX/Revenue for the last three years was 3.3%. During 2014-2018 CAPEX as a % of Revenue topped in 2016 at 6.3% and was declining since that time.
Return on investment
The company operates at high and attractive ROIC (32.3%) and ROE (26.5%). ROIC decreased slightly on 1.2 pp from 33.5% to 32.3% in 2018. ROE showed almost no change in 2018. During the last 5 years ROIC topped in 2015 at 35.7% and was declining since that time.
Management team
The company's CEO R Srikrishna "Keech" has spent 6 years with the company. CEO total compensation was ₹56,620,000 in 2018 which included ₹4,720,000 salary. Hexaware Technologies's CFO is Vikash Kumar Jain. Vikash Kumar Jain has 2 years tenure at the company.
Financial and operational results
FY ended 31-12-2018
Hexaware Technologies ($HEXAWARE) key annual financial indicators| mln. INR | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 25,817 | 31,235 | 35,349 | 39,420 | 46,478 | 17.9% |
| SG&A | | 151 | | | | |
| EBITDA | 4,776 | 5,358 | 5,764 | 6,552 | 7,338 | 12.0% |
| EBIT | | | | | 6,688 | |
| Tax | | | | | 1,431 | |
| Net Income | 3,202 | 3,932 | 4,192 | 4,995 | 5,835 | 16.8% |
| Stock Based Compensation | | | | | 374 | |
Balance Sheet
|
|---|
| Cash | 2,865 | 3,862 | 2,731 | 5,147 | 8,047 | 56.3% |
| Accounts Receivable | | | | | 8,031 | |
| Accounts Payable | | | | | 3,300 | |
| Short Term Debt | 0 | 0 | 0 | 0 | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | |
Cash flow
|
|---|
| Capex | 604 | 1,367 | 2,223 | 957 | 609 | -36.4% |
Ratios
|
|---|
| Revenue growth | 13.0% | 21.0% | 13.2% | 11.5% | 17.9% | |
| EBITDA growth | -6.9% | 12.2% | 7.6% | 13.7% | 12.0% | |
|
|---|
| EBITDA Margin | 18.5% | 17.2% | 16.3% | 16.6% | 15.8% | -0.8% |
| EBIT Margin | | | | | 14.4% |
| SG&A, % of revenue | | 0.5% | | | | |
| SBC, % of revenue | | | | | 0.8% |
| Net Income Margin | 12.4% | 12.6% | 11.9% | 12.7% | 12.6% | -0.1% |
| CAPEX, % of revenue | 2.3% | 4.4% | 6.3% | 2.4% | 1.3% | -1.1% |
|
|---|
| ROIC | 34.7% | 35.7% | 33.8% | 33.5% | 32.3% | -1.2% |
| ROE | 25.7% | 28.9% | 26.4% | 26.7% | 26.5% | -0.1% |
| Net Debt/EBITDA | -0.6x | -0.7x | -0.5x | -0.8x | -1.1x | -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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Financial Technologies (India) ($FINANTECH) | - | -62.4% | -2.6% | 6.5% | 48.1% |
| Ajel ($AJEL) | - | - | - | -25.6% | -55.4% |
| |
|---|
| Median (2 companies) | 14.2% | 8.1% | 9.1% | -9.6% | -3.6% |
|---|
| Hexaware Technologies ($HEXAWARE) | - | 21.0% | 13.2% | 11.5% | 17.9% |
Top companies by EBITDA margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Financial Technologies (India) ($FINANTECH) | - | -113.0% | -109.6% | -57.3% | -22.7% |
| |
|---|
| Median (1 company) | 18.0% | 12.3% | 13.6% | -57.3% | -22.7% |
|---|
| Hexaware Technologies ($HEXAWARE) | 18.5% | 17.2% | 16.3% | 16.6% | 15.8% |
Top companies by CAPEX/Revenue, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Financial Technologies (India) ($FINANTECH) | - | 6.5% | 5.4% | 9.2% | 4.7% |
| |
|---|
| Median (1 company) | 3.2% | 3.0% | 2.7% | 9.2% | 4.7% |
|---|
| Hexaware Technologies ($HEXAWARE) | 2.3% | 4.4% | 6.3% | 2.4% | 1.3% |
Top companies by ROIC, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Financial Technologies (India) ($FINANTECH) | - | - | -7.4% | -4.3% | -2.9% |
| Ajel ($AJEL) | - | - | - | - | - |
| |
|---|
| Median (2 companies) | 22.3% | 19.4% | 18.9% | -4.3% | -2.9% |
|---|
| Hexaware Technologies ($HEXAWARE) | 34.7% | 35.7% | 33.8% | 33.5% | 32.3% |
