Over the last few years Hexaware Technologies showed solid growth in fundamentals
10 Feb 2016 • About Hexaware Technologies (
$HEXD) • By InTwits
Hexaware Technologies is an attractive growth stock in IT Consulting & Software industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Hexaware Technologies showed fast growth in the last financial year. Hexaware Technologies's revenue surged on 21.0% in FY2015. Together with revenue growth Hexaware Technologies also managed to keep EBITDA growth. EBITDA grew 12.2% for the same period.
If we look for the longer period Hexaware Technologies showed fast revenue growth of 17.0% from FY2012 to FY2015 annually. EBITDA surged on 9.86% from FY2012 to FY2015 annually.
Hexaware Technologies ($HEXD) financials for the last 5 years
| mln. INR | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Revenue | 14,505 | 19,482 | 22,853 | 25,817 | 31,235 |
|---|
| Revenue growth, % | | 34.3% | 17.3% | 13.0% | 21.0% |
|---|
| SG&A, % | | | | | 0.482% |
|---|
| EBITDA | 2,614 | 4,041 | 5,130 | 4,776 | 5,358 |
|---|
| EBITDA growth, % | | 54.6% | 26.9% | -6.9% | 12.2% |
|---|
| EBITDA margin, % | 18.0% | 20.7% | 22.4% | 18.5% | 17.2% |
|---|
| Net Income | 2,670 | 3,276 | 3,791 | 3,202 | 3,932 |
|---|
| Net Income margin, % | 18.4% | 16.8% | 16.6% | 12.4% | 12.6% |
|---|
| |
| CAPEX | 633 | 744 | 411 | 604 | 1,367 |
|---|
| CAPEX/Revenue, % | 4.36% | 3.82% | 1.80% | 2.34% | 4.38% |
|---|
| Debt | 0 | 0 | 0 | 0 | 0 |
|---|
| Cash | 487 | 676 | 1,226 | 2,865 | 3,862 |
|---|
| Net Debt/EBITDA | -0.2x | -0.2x | -0.2x | -0.6x | -0.7x |
|---|
| |
| ROIC, % | 23.8% | 33.5% | 39.2% | 34.7% | 35.7% |
|---|
| ROE, % | 26.9% | 29.5% | 31.6% | 25.7% | 28.9% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. In the longer period Hexaware Technologies showed big decline in EBITDA margin of 3.50 pp from 20.7% in FY2012 to 17.2% in FY2015.
We call Hexaware Technologies an attractive growth stock as together with the growth it delivers high ROIC at 35.7%. During the last three years it increased - it was 33.5% in FY2012. It's average ROIC for the last three years was 36.5%.
The company's Net Income margin increased slightly on 0.200 pp from 12.4% to 12.6% in FY2015. If we look for the longer period the company's Net Income margin dropped on 4.20 pp from 16.8% in FY2012 to 12.6% in FY2015.
Hexaware Technologies operates at ROE of 28.9%. It's average level of ROE for the last three years was 28.7%.
Capital expenditures (CAPEX)
In FY2015 the company had CAPEX/Revenue of 4.38%. CAPEX/Revenue surged on 0.558 pp from 3.82% in FY2012 to 4.38% in FY2015. It's average CAPEX/Revenue for the last three years was 2.84%.
Leverage (Debt)
Hexaware Technologies has negative net debt at -0.7x Net Debt/EBITDA - at the same time with high growth. If we look for the longer period the company's leverage surged on 0.55x from -0.17x in FY2012 to -0.72x in FY2015.
Management team
Hexaware Technologies is headed by R Srikrishna as a CEO.
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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top |
|---|
| 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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top |
|---|
| 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, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top |
|---|
| 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% |
