Hexaware Technologies revenue jumped on 20.1% and EBITDA Margin showed almost no change
11-02-2020 • About Hexaware Technologies (
$HEXAWARE) • By InTwits
Hexaware Technologies reported 2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hexaware Technologies is a fast growth stock: 2019 revenue growth was 20.1%, 5 year revenue CAGR was 16.7% at 2019 ROIC 30.7%
- EBITDA Margin is relatively stable: 15.7% in 2019 vs. 15.8% in 2018 vs. 17.2% in 2015
- 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: ₹1,296m in 2019, ₹609m in 2018, ₹957m in 2017, ₹2,223m in 2016, ₹1,367m in 2015
- The company has highly profitable business model: ROIC is 30.7%
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 jumped on 20.1%. During 2015-2019 Revenue growth bottomed in 2017 at 11.5% and was accelerating since that time. EBITDA Margin showed almost no change in 2019. EBITDA Margin followed a declining trend at -0.34 pp per annum in the last 5 years.
Net Income margin decreased slightly on 1.1 pp from 12.6% to 11.5% in 2019.
Investments (CAPEX, working capital and M&A)
In 2019 Hexaware Technologies had CAPEX/Revenue of 2.3%. Hexaware Technologies's CAPEX/Revenue decreased on 4.0 pp from 6.3% in 2016 to 2.3% in 2019. Average CAPEX/Revenue for the last three years was 2.0%.
Return on investment
The company operates at high and attractive ROIC (30.7%) and ROE (24.9%). ROIC decreased slightly on 1.6 pp from 32.3% to 30.7% in 2019. ROE decreased slightly on 1.7 pp from 26.5% to 24.9% in 2019. ROIC stuck to a declining trend at -1.2 pp per annum in 2015-2019. ROE followed a declining trend at -0.79 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.1x and Debt / EBITDA is 0.2x. Debt surged while cash dropped on 72.3%.
Hexaware Technologies has no short term refinancing risk: cash is higher than short term debt (175,655.1%).
Management team
Hexaware Technologies's CEO is R Srikrishna "Keech". R Srikrishna "Keech" has 6 years tenure with the company. Hexaware Technologies's CFO Vikash Kumar Jain has spent 2 years with the company.
Financial and operational results
FY ended 31-12-2019
Hexaware Technologies ($HEXAWARE) key annual financial indicators| mln. INR | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 31,235 | 35,349 | 39,420 | 46,478 | 55,825 | 20.1% |
| SG&A | 151 | | | | | |
| EBITDA | 5,358 | 5,764 | 6,552 | 7,338 | 8,782 | 19.7% |
| EBIT | | | | 6,688 | | |
| Tax | | | | 1,431 | | |
| Net Income | 3,932 | 4,192 | 4,995 | 5,835 | 6,413 | 9.9% |
| Stock Based Compensation | | | | 374 | | |
Balance Sheet
|
|---|
| Cash | 3,862 | 2,731 | 5,147 | 8,047 | 2,231 | -72.3% |
| Accounts Receivable | | | | 8,031 | | |
| Accounts Payable | | | | 3,300 | | |
| Short Term Debt | 0 | 0 | 0 | | 1 | |
| Long Term Debt | 0 | 0 | 0 | | 1,429 | |
Cash flow
|
|---|
| Capex | 1,367 | 2,223 | 957 | 609 | 1,296 | 113.0% |
Ratios
|
|---|
| Revenue growth | 21.0% | 13.2% | 11.5% | 17.9% | 20.1% | |
| EBITDA growth | 12.2% | 7.6% | 13.7% | 12.0% | 19.7% | |
|
|---|
| EBITDA Margin | 17.2% | 16.3% | 16.6% | 15.8% | 15.7% | -0.1% |
| EBIT Margin | | | | 14.4% | |
| SG&A, % of revenue | 0.5% | | | | | |
| SBC, % of revenue | | | | 0.8% | |
| Net Income Margin | 12.6% | 11.9% | 12.7% | 12.6% | 11.5% | -1.1% |
| CAPEX, % of revenue | 4.4% | 6.3% | 2.4% | 1.3% | 2.3% | 1.0% |
|
|---|
| ROIC | 35.7% | 33.8% | 33.5% | 32.3% | 30.7% | -1.6% |
| ROE | 28.9% | 26.4% | 26.7% | 26.5% | 24.9% | -1.7% |
| Net Debt/EBITDA | -0.7x | -0.5x | -0.8x | -1.1x | -0.1x | 1.0x |
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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Financial Technologies (India) ($FINANTECH) | -62.4% | -2.6% | 6.5% | 48.1% | - |
| Ajel ($AJEL) | - | - | -25.6% | -55.4% | -18.6% |
| |
|---|
| Median (2 companies) | 8.1% | 9.1% | -9.6% | -3.6% | -18.6% |
|---|
| Hexaware Technologies ($HEXAWARE) | - | 13.2% | 11.5% | 17.9% | 20.1% |
Top companies by EBITDA margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Ajel ($AJEL) | - | 3.5% | - | - | -11.7% |
| |
|---|
| Median (1 company) | 12.3% | 13.6% | -57.3% | -22.7% | -11.7% |
|---|
| Hexaware Technologies ($HEXAWARE) | 17.2% | 16.3% | 16.6% | 15.8% | 15.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Ajel ($AJEL) | - | - | - | - | 3.2% |
| |
|---|
| Median (1 company) | 3.0% | 2.7% | 9.2% | 4.7% | 3.2% |
|---|
| Hexaware Technologies ($HEXAWARE) | 4.4% | 6.3% | 2.4% | 1.3% | 2.3% |
Top companies by ROIC, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Financial Technologies (India) ($FINANTECH) | - | -7.4% | -4.3% | -2.9% | - |
| Ajel ($AJEL) | - | - | - | - | - |
| |
|---|
| Median (2 companies) | 19.4% | 18.9% | -4.3% | -2.9% | - |
|---|
| Hexaware Technologies ($HEXAWARE) | 35.7% | 33.8% | 33.5% | 32.3% | 30.7% |
