Hexaware Technologies reports 22.8% Net Income growth while 1.3 pp EBITDA Margin decline from 18.5% to 17.2%
03 Feb 2016 • About Hexaware Technologies (
$HEXD) • By InTwits
Hexaware Technologies reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hexaware Technologies is a fast growth stock: FY2015 revenue growth was 21.0%, 5 year revenue CAGR was 24.3% at FY2015 ROIC 35.7%
- Hexaware Technologies has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's a lot of higher than industry average of 2.7%.
- CAPEX is quite volatile: 1,367 in FY2015, 604 in FY2014, 411 in FY2013, 744 in FY2012, 633 in FY2011
- The company has highly profitable business model: ROIC is at 35.7%
- It operates with high leverage: Net Debt/EBITDA is -0.7x while industry average is -0.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hexaware Technologies ($HEXD) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 14,505 | 19,482 | 22,853 | 25,817 | 31,235 | 21.0% |
| SG&A | | | | | 151 | |
| EBITDA | 2,614 | 4,041 | 5,130 | 4,776 | 5,358 | 12.2% |
| Net Income | 2,670 | 3,276 | 3,791 | 3,202 | 3,932 | 22.8% |
Balance Sheet
|
|---|
| Cash | 487 | 676 | 1,226 | 2,865 | 3,862 | 34.8% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 633 | 744 | 411 | 604 | 1,367 | 126.3% |
Ratios
|
|---|
| Revenue growth | 37.5% | 34.3% | 17.3% | 13.0% | 21.0% | |
| EBITDA growth | 186.7% | 54.6% | 26.9% | -6.9% | 12.2% | |
| EBITDA Margin | 18.0% | 20.7% | 22.4% | 18.5% | 17.2% | -1.3% |
| Net Income Margin | 18.4% | 16.8% | 16.6% | 12.4% | 12.6% | 0.2% |
| SG&A, % of revenue | | | | | 0.5% | 0.5% |
| CAPEX, % of revenue | 4.4% | 3.8% | 1.8% | 2.3% | 4.4% | 2.0% |
| ROIC | 23.8% | 33.5% | 39.2% | 34.7% | 35.7% | 1.0% |
| ROE | 26.9% | 29.5% | 31.6% | 25.7% | 28.9% | 3.2% |
| Net Debt/EBITDA | -0.2x | -0.2x | -0.2x | -0.6x | -0.7x | -0.1x |
Revenue and profitability
Hexaware Technologies's Revenue surged on 21.0% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.1 pp from 21.1% to 19.0% in FY2015.
Net Income marign showed almost no change in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 4.4%. Hexaware Technologies showed small growth in CAPEX/Revenue of 0.56 pp from 3.8% in FY2012 to 4.4% in FY2015. For the last three years the average CAPEX/Revenue was 2.8%.
Return on investment
The company operates at high and attractive ROIC (35.73%) and ROE (28.87%). ROIC increased slightly on 1.0 pp from 34.7% to 35.7% in FY2015. ROE increased on 3.2 pp from 25.7% to 28.9% in FY2015.
Leverage (Debt)
The company has no debt. Cash jumped on 34.8% in FY2015.
Management team
R Srikrishna is a Hexaware Technologies's CEO. R Srikrishna is a founder and has spent 4 years at the company.
Appendix 1: 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 EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Financial Technologies (India) ($FTIS) | -26.7% | 0.9% | 28.1% | | -113.0% |
| |
|---|
| Median (1 company) | -26.7% | 0.9% | 28.1% | | -113.0% |
|---|
| Hexaware Technologies ($HEXD) | 18.0% | 20.7% | 22.4% | 18.5% | 17.2% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Financial Technologies (India) ($FTIS) | 64.7% | 8.6% | 11.2% | | 6.5% |
| |
|---|
| Median (1 company) | 64.7% | 8.6% | 11.2% | | 6.5% |
|---|
| Hexaware Technologies ($HEXD) | 4.4% | 3.8% | 1.8% | 2.3% | 4.4% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Financial Technologies (India) ($FTIS) | -6.3% | -1.0% | 5.6% | | |
| |
|---|
| Median (1 company) | -6.3% | -1.0% | 5.6% | | |
|---|
| Hexaware Technologies ($HEXD) | 23.8% | 33.5% | 39.2% | 34.7% | 35.7% |
