Hexaware technologies ltd.

1
VandanaPareek- Assistant Research Analyst (vandana.pareek@jainam.in); 0261-6725518
IT Consulting & SoftwareInitiating Coverage |
21 January 2019
Investors are advised to refer through important disclosures made at the last page of the
Research Report.
Jainam Share Consultant research is available on www.jainam.in

Jainam share Consultant Pvt Ltd. Sector : IT Consulting & Software
21-01-2019 2
Index
A. Company Overview
1. About……………………………………………………….…………….…….3
2. Investment Rationale……………………………………….…………………4
3. Risk………………………………………………….………………………….5
B. Industry Overview
1. Software Industry….….……………………………………………..………………………………….6
C. Business of the Company
1. Service Offerings…….……..…..………….…………………….………….……..8
2. Revenue Break-up…...…………………………………………………….….14
3. Top Shareholders…………………………………..…………………………16
4. Management………………………………………………………………….16
D. Financial Outlook
1. Balance Sheet……………………………….……………….….……………..17
2. Profit & Loss…………………………………….………….………...………….18
3. Cash Flow Statement…………………………………………………..………18
4. Ratio………………………………………..….………………………………19
E. Analysis
1. Peer Analysis………………………………………………………………….20
2. Valuation………………………………………………………………………22
F. Conclusion
1. Recommendation…………………………………….………………………..25
2. Sources……………………………………………….………………………..26
3. Full Form & Glossary………………………………………………………….27
4. Report Gallery………………………………………………………………….28
5. Disclaimer……………………………………………………………………..29

21-01-2019 3
Company Overview
About
Exchange: BSE BSE Code: 532129 Current Market Price: 324.95 Date:17-Jan-19
Latest Date 17-Jan-2019
Latest Price (Rs) 324.95
52 Week High (Rs) 557.40
52 Week Low (Rs) 294.80
Face Value(Rs) 2.00
Industry PE 19.90
TTM Period 2018-09
Price/BV(x) 4.01
EV/TTM EBIDTA(x) 11.50
TTM PE 16.64
EV/TTM Sales(x) 2.08
Dividend Yield% 1.23
MCap/TTM Sales(x) 2.20
Market Cap (Rs in Cr. ) 9669.58
EV (Rs) 9139.80
Latest no. of shares (in Cr.) 29.76
Source : Ace Analyser, Software
Hexaware Technologies Ltd.
Hexaware Technologies Limited (HTL), founded
in 1990 by Atul chandra Nishar, is a global
provider of IT, BPO and consulting services.
They serve customers in Banking, Financial
Services, Capital Markets, Healthcare,
Insurance, Manufacturing, Retail, Education,
Telecom, Professional services (Tax, Audit,
Accounting and Legal), Travel, Transportation
and Logistics.
They deliver highly evolved services in Rapid
Application prototyping, development and
deployment; Build, Migrate and Run cloud
solutions; Automation-based Application
support; Enterprise Solutions for digitizing the
back-office; Customer Experience
Transformation; Business Intelligence &
Analytics; Digital Assurance (Testing);
Infrastructure Management Services; and
Business Process Services. Hexaware's global
operations are located in North America,
Europe and Asia Pacific.
The Company is on a transformation journey,
helping organizations re-imagine their
businesses, shrink IT costs, enhance their
business operations, accelerate digital
transformation and maximize returns using its
‘Shrink IT Grow Digital strategy’.

21-01-2019 4
Investment Rationale
 Organic Growth: In the last three years, Hexaware has been the fastest organically growing
IT services company. Over the past three years, Hexaware’s revenue growth has
outperformed that of peers on an organic basis, led by its ‘Shrink IT, Grow Digital’ strategy.
For boosting organic growth, it launched an initiative known as the Hyper-Growth Premier
League. Teams in Cloud, Call Centre Transformation, Integrated Automation, Enterprise
Integration and Analytics compete against each other gaining a score based on customers
acquired and revenue generated.
 Robust Financial compared to Peers : Hexaware return on capital employed is 34% as
compared to its mid - cap peers, whose ROCE is below 28%. Companies ROE is also above 20%
as compared to other software companies except Mindtree. Sales growth is far better than its
competitors which is around 11%.
 Promoters Holding : HT Global IT Solutions Holdings Limited holds 62.66% share in
Hexaware technologies. HT Global IT Solutions Holdings Limited operates as an investment
holding company. Baring Private Equity Asia's (BPEA) wholly owns HT Global IT Solutions
Holdings Limited.
 Higher growth compared to industry : Worldwide IT spending is USD 3.6 trillion in 2018
with a growth rate of 4.5% and it expected that in 2019 that growth rate will be 3.2% which is
lower. It is expected that enterprise software spending will increase at a growth rate of 8.3%.
Hexaware sales is growing at a CAGR of 15% in last 5 years which is above industries growth
rate.
 Lower Client Concentration : Majority of the clients of Hexaware are below USD 5 million
i.e. above 150+ clients. Due to which any furlough in clients will not hit its revenue badly. It
has only 4 clients above USD 20 million.
 Collaboration with Microsoft : Hexaware announced a global collaboration with
Microsoft to accelerate cloud adoption by enterprises. This collaboration is focused on driving
digital transformation with clear business return on investment for enterprises using
Microsoft Azure across the globe. As a part of this collaboration, Hexaware will use Azure in
building solutions that improve reliability and reduce operating costs while transforming
customer experiences.
Particular
Persistent
System
Cyient NIIT Tech
Hexaware
Tech.
Mindtree Mphasis
ROCE% 21.30 22.72 23.54 34.25 26.55 18.57
ROE% 16.16 18.44 18.00 21.51 21.54 14.46
ROA (%) 13.16 10.61 10.51 21.72 16.21 11.85
Sales
Growth(%)
5.39 9.15 6.76 11.52 4.32 7.73
PATM% 10.65 10.69 10.32 12.66 10.44 12.79

21-01-2019 5
Risk
 Currency Volatility: Company derives 77.40% of total revenue from North America and
13.30% of the business revenue arise from Europe, hence any currency volatility could impact
its margins. H-1B visa regime by US President Donald Trump has raised concerns among
Indian IT firms, as any changes in the visa regime may result in higher operational costs and
shortage of skilled workers Indian outsourcing industry.
 Stiff Competiton: Company is facing stiff competition from other large and small software
companies in India and they have lack of pricing power. Rapid changes in competitors’
offerings and technological landscape lead to new product requirements by customers over a
short period of time. Companies like
 Infosys: are in Aerospace & Defence, Agriculture, automotive, communication
services, financial services, healthcare, insurance, life science, oil & gas, retail and
many more.
 NIIT Technologies: Travel & Transportation, Insurance, Banking & Financial Services
and enterprise services.
 Mphasis: Banking - Capital market, Insurance, communication, healthcare, energy &
utilities, logistic, manufacturing and other.
 Mindtree: Banking, Capital market, consumer packaged goods, consumer technology,
education, manufacturing, travel & hospitality and other.
 Wipro: Aerospace & Defence, automotive, healthcare, natural resources, securities &
capital market, oil& gas, pharmaceutical & life sciences and other.

21-01-2019 6
Industry Overview
Software Industry
In the last decade, the industry has grown five fold in revenue terms, and relative share to India’s
GDP has increased to > 7.9 percent in FY2017-18. India is the topmost off-shoring destination for
IT companies across the world. Having proven its capabilities in delivering both on-shore and
off-shore services to global clients, emerging technologies now offer an entire new gamut of
opportunities for top IT firms in India. The country's cost competitiveness in providing IT services,
which is approximately 3-4 times cheaper than the US, continues to be its Unique Selling
Proposition (USP) in the global sourcing market. Indian IT-ITeS industry offers cost-effectiveness,
great quality, high reliability, speedy deliveries and, above all, the use of state-of-the-art
technologies globally.
Indian global sourcing market growth continues to outperform IT-BPM industry growth. During
2017-18, the global IT-ITeS market grew to US$ 1.3 lakh crore (excl. hardware) and global sourcing
market increased by 1.4 times to reach US$ 18500-19000 crore. India continued as the world’s top
sourcing destination with a significant share of 55%. Indian IT-ITeS industry has set up over 1000
global delivery centres in over 200 cities in about 80 countries around the world.
The USA, UK and EU remain the major markets for the IT software and services exports,
accounting for ~90% of the total IT-ITeS exports, however, there are new challenges surfacing in
these traditional geographies. Demands from Asia Pacific (APAC), Latin America and Middle East
Asia is growing and new opportunities are emerging for expanding in continental Europe, Japan,
China and Africa. The estimated share of export markets in FY2017-18:
Source :Ministry of electronic and IT, Website

21-01-2019 7
Worldwide IT spending is projected to total USD 3.8 trillion in 2019, an increase of 3.2 percent
from expected spending of USD 3.7 trillion in 2018, according to the latest forecast by Gartner.
Growth Drivers
 Enterprise Software: Enterprise Software is expected to register a growth of 8.3% to reach
$425 billion. Under its ambit, Infrastructure software is expected to grow at 5.9% in 2018 and
at a CAGR of 5.8% till 2021.
 IT Services: The IT service segment is expected to grow at CAGR of 4.8% till 2021, to reach
the market size of $1.1 trillion. Amongst which, Infrastructure as a service shall be the highest
contributor to the growth while more traditional infrastructure outsourcing service delivery is
expected to contract.
 Communications Services: The consumer mobile services sector is expected to grow at a
rate of 2.5% annually till 2021. The shift has been seen in Asian markets where the users are
reducing mobile data only connections and thus shifting from tablets to mobile phones.
2017
Spending
2017
Growth
(%)
2018
Spending
2018
Growth
(%)
2019
Spending
2019
Growth
(%)
Data Center
Systems
181 6.4 192 6.0 195 1.6
Enterprise
Software
369 10.4 405 9.9 439 8.3
Devices 665 5.7 689 3.6 706 2.4
IT Services 931 4.1 987 5.9 1034 4.7
Communications
Services
1392 1.0 1425 2.4 1442 1.2
Overall IT 3539 3.9 3699 4.5 3816 3.2
in USD trillion

21-01-2019 8
Business Of The Company
Service Offerings
 Application Transformation Management : They provide comprehensive Application
Transformation and Management services that are designed to provide effective system
integration services across industries. Their approach for custom development follows a
‘Mobile First’ strategy, ensuring applications are seamlessly accessible across devices and
channels. Application Transformation Management services encompass enterprise
architecture consulting, application development, SOA & integration, Agile DevOps, and Cloud
Services.
 Agile Transformation Services : This approach provides a large amount of services
encompassing assessment, practical transformation road map, implementation and
support across all functions from the executive level, portfolio, program, execution,
delivery and operations.
 Enterprise Architecture : Enterprise Architecture (EA) is transforming into a platform to
innovate business models, drive market changes, and extract more business value from
existing investments. Hexaware’s EA platform, composed of multiple competencies and
capabilities aligned around the business life cycle of an organization. To standardize
services and improve an engagement’s cycle time, they tailor the offerings according to
each industry vertical by using solution templates, function models, reference
architecture, and guidelines.
 API & Integration : Hexaware’s integration solutions helps in delighting the partners,
vendors and customers alike with unified experience for better business, every time. The
Integration Center of Excellence (CoE) as a Service helps in servicing integration
requirements such as API-led connectivity, microservices enablement, application
integration, business activity monitoring, SOA, EAI & ESB integration, mobility integrations
and cloud, on premise and hybrid integrations. Services Offering :
 Experience & Marketplace API
 Microservices Driven Application Enablement
 Legacy Integration Platform Modernization
 API Driven Process Optimization
 Enterprise Automation
 Integration CoE as a Service

21-01-2019 9
 Application Development :
Capabilities
Solution
Accelerator
Functionality
Mobile first approach
development
WorkQuikr
Mobile Application Development Platform
(MADP) to prototype, create, deploy and
manage enterprise mobile applications.
Model driven app
development
AppGen
Model-driven architecture (MDA) for various
industry standards & frameworks, and web
services.
AppStarterKit
Pattern-driven software factory that offers a
solution structure for different application
types, and a component & guidance library to
simplify and accelerate the development of
layered applications.
Tool-driven app
development
Hexcelerator
Studio
Collection of tools, reusable components and
platforms that enable multi-layered
application development. It also supports the
creation of prototypes, code quality definition,
and management of the entire application
lifecycle.
Framework-driven app
assessment, upgrade &
migration
Portfolio Analysis
Tool (PAT)
Multidimensional portfolio analysis from a
Service-Oriented Architecture (SOA)
perspective. It also enables rationalization of
the application portfolio and provides an SOA
application roadmap.
Cloud app assessment,
migration, development, and
multitenant and SaaS
enablement
Cloud App
Assessment
Report (CAAR)
Report for identification of ‘quick win’
applications that have potential to offer higher
returns and reduced Total Cost of Ownership
(TCO).
Application Cloud
Enabler (ACE)
Web-based wizard to seamlessly transfer
on-premise web apps to the Amazon Web
Services (AWS) cloud.

21-01-2019 10
 Software product Engineering : Hexaware's Software Product Engineering
in Enterprises for Digital ( Hi Speed). It provides best in class and comprehensive Product
Engineering Solutions to enhance there client's capabilities in adopting new digital models,
proactively address customer requirements and quicker time to market to further their
competitive edge.
 Cloud Services : Cloud services are grouped under four categories to offer
comprehensive support to businesses in their cloud journey at every step of the way.
Hexaware enables organizations to enhance their infrastructure and applications by
introducing automation and utilizing hybrid cloud services.
 Application Support & Maintenance : Hexaware has redesigned its core Application
Maintenance and Support offering to help there customers focus on delivering digital and
innovative strategies, by alleviating their locked-in application maintenance cost. Application
services are customized to meet the needs of today’s nimble enterprises, while being focused
on preempting issues and enhancing application stability.
 NextGen ASM : NextGen ASM caters to organizations that are required to deal with the
application support needs of the fast-changing digital applications along with the
slow-paced legacy and back-end applications. NextGen ASM is designed to enable
Hexaware’s Go Digital vision for its customers.
 Business Intelligence and Analytics : Hexaware is the partner-of-choice for Chief Data
Officer (CDOs) in the data2digitalTM journey to transform information systems from
management decision-support systems to analytical engines powering the Digital Enterprise.
Services Offered:
 Cloud EDMA : Cloud EDMA (Enterprise Data Management & Analytics) is designed to
provide a holistic solution to businesses for kickstarting their cloud migration journey in a
cost-effective manner, without affecting existing systems and processes. They automate
the Data Warehouse landscape — assessment, consolidation and migration by
fast-tracking processes, speedy deployment, recovering anomalies, and using strong
security and governance.
 Analytics Services : Hexaware has well defined maturity road maps for each of the
domain areas. Hexaware has developed offerings in upcoming areas of analytics like video,
voice, image and text. They partner with and nurture niche innovative startups to develop
competency in upcoming technologies.
DAOSaaSify
Lite Data Access Object (DAO) tool to define
the tenancy model and generate
multi-tenancy persistence layer classes from
any resource model for multi-tenant enabled
DB.
App and website
development for Windows
10 Universal Windows
Platform (UWP)
SiteScanQuikr
Compatibility scanner for Internet Explorer 11
and Microsoft Edge browsers to address
violations.
Universal
Windows apps kit
Starter kit and reusable components for UWP
app development and migration.

21-01-2019 11
 Internet of Things : Hexaware offers the following IoT solutions:
 Fleet Management
 Used Based Insurance
 Vehicle Equipment Leasing
 Big Data Analytics & Services : Hexaware Business Intelligence & Analytics solutions
combine the best of both worlds – Strong Domain Expertise with impeccable technology
credentials – to provide the “Right” solutions to our customers.
 Data Science Community :
Hexaware with its first-hand experience of solving data science problems realized earlier on
that building and nurturing a team of Data Scientists at scale requires a markedly different
approach compared to the traditional learning and development model. Hexaware’s robust
Data Science Community Development Approach follows the innovative 7E approach:
 Explore & Elaborate: Analyze and articulate market trends and use cases.
 Evaluate & Evangelize: Assess, choose and socialize solutions and methodology.
 Empower, Engage and Expand: Enable the community to explore unchartered areas and
breach boundaries to deliver newer insights to our customers.
 Business Process Services : Hexaware is a new age Business Process Services provider,
focused on delivering business impact and create sustainable advantages for its customers by
transforming the back office and front office operations.
 Robotic Process Automation : RPA is the use of software to handle high-volume,
repeatable tasks. RPA technology can be used to handle such processing, while providing
speed in execution and improvement in accuracy.
Data
Scientist
Strong Business
acumen & ability
to tell compelling
story through
visuals
Applied
Knowledge in
Math,
Algorithms,
Modelling &
Statistics
Large & Complex
Data Crunching
Abilities
Source : Website, Hexaware Technologies

21-01-2019 12
 Finance & Accounting : Hexaware brings in a unique amalgamation of Finance &
Accounts (F&A) BPO services delivery capability and ability to drive in optimal automation
across complete F&A value chain. Sub offering are : Procedure to pay services, Order to
cash services, Record to report Services.
 Customer Experience Services : Hexaware follows a standard approach to study CSAT
and NPS. Attempt to link the customers end-to-end journey through multiple
touchpoints.
 Human Resources : Comprehensive HR services on transactional, administrative and
strategic tasks help streamline your processes that enable employees and stakeholder to
easily access, update, and manage HR information to take the right decisions.
 Digital Customer :
 Digital Transformation Consulting: Offer consultation to move towards a solution that
provides transformational outcomes in terms of customer experience, business efficiency,
and business innovation.
 Automate Everything: Hexaware’s Automating Everything strategy aims at helping our
clients with lowered costs, minimal human intervention and dramatically improved
end-user experience.
 Cloudify Evetything : With there Cloudify Everything strategy, we offer a diverse set of
cloud-related solutions, tools, and platforms encompassing the complete lifecycle of
cloud.
 Transform Customer Experience: Hexaware follows a design-led approach with a focus
on helping clients build Customer Experience, thereby delivering ultimate value to them.
 Digital Assurance : Hexaware’s Digital Assurance practice empowers enterprises to be
digital disruptors in their market place.
 Quality Engineering : Quality Engineering is a process of testing, analyzing and improving
software quality throughout the application development lifecycle. The process of Quality
Engineering relies more on Test Automation than manual testing.
 DIGI-Test : Hexaware follows an Automation-first approach right from test creation to
implementation cycles, backed by our own IP platform ‘Digi-test’ – Digital Testing Solution.
Hexaware’s ‘Digi-Test’ offering provides a range of end-to-end solutions from
Multi-Channel to API to Big Data Testing in line with Agile and DevOps culture.
 Managed Services: Managed Testing Services provide the test organization, processes,
high quality QA services, testing directors and qualified testing engineers to resolve major
testing-related problems and achieve best results.
 Test Advisory & Consulting : Hexaware’s test advisory and consulting services offering
includes end-to-end QA IT evaluation and assessment across various facets viz., people,
process, technology & tools.
 Enterprise Solutions : Hexaware’s Enterprise Solutions group has been a forerunner in
enabling process and IT transformation with the power of best-of-breed packaged solutions
that transforms businesses across industries. Service Offering:

21-01-2019 13
 Human Capital Management
 Finance Transformation
 Business Process Management Services
 Workday Services
 SAP Services
 Oracle E - Business Suite Services
 Oracle Cloud Application Services
 PeopleSoft Services
 Supply Chain Transformation
 Salesforce Consulting Services
 Infrastructure Management Services : Infrastructure Management Services focuses on
digitalization which allows us to propose two key differentiators for our customers in the form
of application aware infrastructure and supreme user experience. Process Harmonization
Solutions have helped enterprises to improve & standardize IT processes, across its global &
regional business units.
 Cyber Security Resilience Services
 Digital Workplace
 Hybrid Cloud
 Integrated Run
 Digital Operation
 Application Operation
 Service Management
 Raise IT Platform

21-01-2019 14
Revenue Break-up
Geography wise
Alliances & Customers
Key Alliances
 Automation Anywhere : Automation Anywhere is the leader in Robotic Process
Automation (RPA), the platform on which more organizations build world-class Intelligent
Digital Workforces. Automation Anywhere provides automation technology to leading
financial services, insurance, healthcare, technology, manufacturing, telecom and logistics
companies globally.
 Mulesoft : MuleSoft provides the most widely used integration platform for connecting any
application, data source or API, whether in the cloud or on-premises. MuleSoft provides
APIhub, a directory that is designed to function as a social network for developers to share
updates and information.
Source : Investor Presentation, Hexaware Technologies
Source : Investor Presentation, Hexaware Technologies Source : Investor Presentation, Hexaware Technologies

21-01-2019 15
 Microsoft : Microsoft is the world’s leading producer of computer software. Its best known
software products are the Microsoft Windows line of operating systems, Microsoft Office
office suite, and Internet Explorer and Edge web browsers.
 Oracle : Oracle Corporation is the world's leading supplier of software for information
management, and the world's second largest independent software company.
 PEGA : Pegasystems Inc. is the leader in software for customer engagement and operational
excellence. Pega's adaptive, cloud-architected software - built on its unified Pega Platform -
empowers people to rapidly deploy, and easily extend and change applications to meet
strategic business needs.
 SAP : SAP is the world’s largest inter-enterprise software company and the world’s
fourth-largest independent software supplier, overall. SAP is headquartered in Walldorf,
Baden-Württemberg, Germany, with regional offices in 130 countries.
 Salesforce : Salesforce is the world’s No.1 Customer Relationship Management (CRM)
platform. Their cloud-based applications for sales, service, marketing, and more don’t require
IT experts to set up or manage, users can simply log in and start connecting to customers in a
whole new way.
 Workday : Workday is the leader in enterprise-class, Software-as-a-Service (SaaS) solutions
for managing global businesses, combining a lower cost of ownership.
Clients Contribution
Contribution (in mn) No. Of Client
$50 + 3
$30 - $50 0
$20 - $30 1
$10 - $20 6
$5 - $10 15
$1 - $5 70
> $1 95

21-01-2019 16
Top Shareholders
Management
Name Designation
R. Srikrishna Chief Executive Officer
Ashok Harris President – Global Delivery
Amrinder Singh Senior Vice President - Europe Operations
Krishna Kumar Chief Technology Officer
Amalesh Mishra Vice President - APMEA Operations
Ravi Vidyanathan
President & Global Head - Banking &
Financial Services
Arun Ramchandran
Executive Vice President & Global Head -
Professional Services
Senthil Nayagam K
Senior Vice President & Global operational
Head - ETS
Arvind Kashyap
Senior Vice President & Global Head -
Manufacturing & Consumer
Prasan Prabhakaran
Senior Vice President & Global Head -
Enterprise Solution
Chinmoy Banerjee
Executive Vice President & Global Head -
Business Process Services
Eswar Venkatachalam
Vice President & Head - Travel &
Transportation
Shareholders % Holding
HDFC Trustee Company Ltd. 2.82
T. Rowe Price International Discovery Fund 2.06
SBI Magnum MIDCAP Fund 0.42
Aviva Investors - Emerging Markets Equity Small Cap Fund 0.53
Vanguard Emerging Markets Stock Index Fund, Aserie’S Of Vanguard
International Equity Index Fund
0.38
Emerging Markets Core Equity Portfolio (The Portfolio) Of DFA
Investment Dimensions Group Inc.
0.51
The Emerging Markets Small Cap Series Of The Dfa Investment Trust
Company
0.48
Vanguard Total International Stock Index Fund 0.41
Ishares Core Emerging Markets Mauritius Co 0.20
Gmo Implementation Fund A Series Of Gmo Trust 0.44
As on dec. 2017

21-01-2019 17
Financial Information
Balance Sheet
Particulars Dec -2015 Dec -2016 Dec -2017 TTM
Assets
Non-current assets
Property, plant and equipment 295.71 279.10 358.03 366.78
Capital work in progress 116.03 323.32 256.31 243.43
Goodwill 171.53 176.12 165.63 187.93
Other intangible assets 23.45 23.44 17.71 12.52
Financial assets 24.10 39.20 42.36 31.09
Other Assets 234.49 236.51 251.77 312.26
Current Assets
Financial Assets 1096.41 1179.82 1385.72 1857.69
Other Assets 42.33 53.47 67.78 67.01
Total Assets 2004.05 2310.98 2545.31 3078.71
Equity & Liabilities
Equity 1520.16 1740.91 2007.27 2332.40
Non current liabilities
Financial Liabilities 5.23 3.12 3.11 32.45
Provisions 18.21 26.80 17.93 18.51
Current Liabilities
Financial Liabilities 313.91 373.34 380.77 516.29
Other Liabilities 64.24 59.55 58.97 70.26
Provisions 71.86 88.62 70.73 76.23
Current Tax Liabilities 10.44 18.64 6.53 32.57
Total Equity & Liabilities 2004.05 2310.98 2545.31 3078.71

21-01-2019 18
Profit and Loss
Particulars Dec -2015 Dec -2016 Dec -2017 TTM
Income
Revenue from Operations 3123.52 3534.90 3942.01 3395.34
Exchange rate difference 8.14 35.59 44.96 71.94
Other Income 9.01 3.84 3.58 7.54
Total Income 3140.67 3574.33 3990.55 3474.82
Expenditure
Software & Development Expense 532.59 630.08 739.19 733.72
Employee Benefit Expense 1773.22 1994.39 2168.65 1823.60
Operations & Other Expenses 281.89 334.07 379.00 295.85
Interest - Others 0.12 0.14 0.12 0.02
Depreciation & Amortization Expense 48.24 55.25 63.28 49.23
Total Expenditure 2636.06 3013.93 3350.24 2902.43
Profit Before tax and Share in profit of
Associate
504.61 560.40 640.31 572.40
Share in profit of Associate - - 0.27 0.15
Profit before tax 504.61 560.40 640.58 572.55
Tax Expenses 111.40 141.23 141.05 112.54
Profit after tax 393.21 419.16 499.53 460.01
Cash Flow Statement
Particulars 2015 2016 2017
Cash from Operating Activity 393.20 472.98 476.24
Cash from Investing Activity 14.15 -199.86 -93.80
Cash from Financing Activity -535.32 -314.21 -249.42
Net Cash Flow 93.14 23.70 102.86

21-01-2019 19
Ratio
Performance Ratios 2013 2014 2015 2016 2017
ROA (%) 22.52 18.06 21.08 20.05 21.72
ROE (%) 31.56 25.72 29.12 26.99 27.51
ROCE (%) 40.01 33.73 37.13 35.38 34.25
Growth Ratio 2013 2014 2015 2016 2017
Net Sales Growth (%) 17.31 12.97 20.99 13.17 11.52
EBITDA Growth (%) 18.70 -9.41 17.75 11.34 14.32
EBIT Growth (%) 18.67 -12.64 20.43 11.03 14.30
PAT Growth (%) 15.71 -15.56 22.82 6.60 19.11
Valuation Ratios 2013 2014 2015 2016 2017
P/E (x) 10.42 18.79 18.66 14.93 20.22
P/BV (x) 5.22 3.69 5.20 3.69 5.22
EV/EBITDA (x) 7.03 12.18 12.54 9.45 13.57
M Cap/ Sales 1.73 2.33 2.35 1.77 2.56
Du Pont Analysis 2013 2014 2015 2016 2017
PATM (%) 16.59 12.40 12.59 11.86 12.66
Sales / Total Assets(x) 1.36 1.46 1.67 1.69 1.71
Assets to Equity (x) 1.40 1.42 1.38 1.35 1.27
ROE (%) 31.56 25.72 29.12 26.99 27.51

21-01-2019 20
Analysis
Peer Analysis
Particular
Persistent
System
Cyient NIIT Tech
Hexaware
Tech.
Mindtree Mphasis
Sales (Cr.) 3033.70 3917.50 2991.40 3942.01 5462.80 6545.84
PAT (Cr.) 323.09 418.70 308.70 499.26 570.10 837.50
PATM% 10.65 10.69 10.32 12.66 10.44 12.79
ROCE% 21.30 22.72 23.54 34.25 26.55 18.57
ROE% 16.16 18.44 18.00 21.51 21.54 14.46
ROA (%) 13.16 10.61 10.51 21.72 16.21 11.85
EPS 40.39 36.00 45.56 16.83 34.78 43.34
Dividend
Yield (%)
1.45 1.89 1.74 1.18 1.16 2.37
P/E 17.10 19.13 18.97 20.22 22.25 19.47
Mcap.(cr.) 4385.20 7094.12 7552.48 9669.58 14243.93 16818.64
Sales
Growth(%)
5.39 9.15 6.76 11.52 4.32 7.73
EBITDA
Growth (%)
4.75 20.49 6.71 14.32 22.49 1.41
EBIT Growth
(%)
7.13 28.53 15.82 14.30 32.26 2.47
PAT Growth
(%)
7.17 27.93 13.45 19.11 36.19 5.80
P/BV (X) 2.61 3.25 3.03 5.22 4.66 2.99

21-01-2019 21
Application Development & Maintenance (ADM) Services
Companies
Next-Gen
ADM
Agile
Developme
nt
Continuous
Testing
Next-Gen
ADM BFSI
Industry
Next-Gen
ADM - HCLS
Industry
Next-Gen
ADM -
Manufacturi
ng Industry
HCL Leader Leader Leader Leader Leader Leader
Cognizant Leader Leader Leader Leader Leader Leader
DCX
Technology
Leader Leader Leader Leader Leader Leader
Hexaware Contender Rising Star Leader
Product
Challenger
Contender Not in
Infosys Leader Leader Leader Leader Leader Leader
Mindtree Leader Leader Leader
Product
Challenger
Not in
Product
Challenger
Mphasis Not in Contender Not in
Product
Challenger
Not in Not in
TCS Leader Not in Not in Not in Not in Not in
Wipro Leader Leader Leader Not in Not in Not in
Capgemini Leader Leader Leader Leader Leader Leader

Jainam Share Consultant Pvt Ltd Sector : IT Consulting & Software
21-01-2019 22
Valuations
Scenario 1 assumption:
Based on Profit after tax margin
 It is assumed that sales will grow with a CAGR of 15.14% till FY21 which resulted into the
Rs.6016.87 cr according to 5 years sales average.
 We have assumed 5 years average EBITDAM (%) which is 17.13%.
FY 21 (E)
Particular 5 years avg. EBITDAM(%) - A
SALES (in Cr.) 6016.87
EBITDAM(%) 17.13%
EBITDA (in Cr.) 1030.93
EV/EBITDA (x) 13.57
EV (in Cr.) 13989.74
Cash-Debt (in Cr.) 529.77
MCap (in Cr.) 13459.97
No. of shares (in Cr.) 29.76
Price (Rs.) 452.28
Scenario 2 assumption: -
 It is assumed that sales will grow with a CAGR of 15.14% till FY21 which resulted into the
Rs.6016.87 cr according to 5 years sales average.
 Being on conservative side we have decreased EBITDAM (%) to 15.12% because as due to
H-1B visa regime by US President Donald Trump has raised concerns among Indian IT firms
and due to which cost of employee may increase by 1% to 2%.

21-01-2019 23
FY 21 (E)
Particular 5 years avg. EBITDAM(%) - A
SALES (in Cr.) 6016.87
EBITDAM(%) 15.12%
EBITDA (in Cr.) 909.75
EV/EBITDA (x) 13.57
EV (in Cr.) 12345.33
Cash-Debt (in Cr.) 529.77
MCap (in Cr.) 11815.56
No. of shares (in Cr.) 29.76
Price (Rs.) 397.02
Ben Graham's Formula
 Here, EPS is the trailing 12 month EPS, 8.5 is the P/E ratio of a stock with 0% growth ( for being
on the conservative side) and g is the growth rate for the next 7-10 years.
 Ben Graham's Formula: Value = EPS x (8.5 + 2G)
 In part - A Long term growth rate is considered as per 70% of 5 year net profit CAGR and in
part - B 50% of 3 year net profit CAGR is being considered.
Ben Graham’s Formula
A B
Avg 5-Yr Net Profit (Rs Crore) 402.20 402.20
PE Ratio at 0% Growth 8.50 8.50
Long-Term Growth Rate 6.16 8.00
Ben Graham Value (Rs Crore) 8374.22 9854.73
Number of Shares 29.76 29.76
Graham Value/share 281.39 331.14

21-01-2019 24
Discounted Cash Flow Valuation
Hexaware technologies last 5 year FCF growth rate is 21% so being on conservative side valuation
is derived by assuming the growth of 19% for the next 5years and 16% growth from 6-10 years and
2% after 10 years (Terminal Value) in the business. Discount rate is being assumed on the basis of
CAPM model.
Initial Cash Flow 381.00
Years 1-5 6-10
FCF Growth Rate 19.00% 16.00%
Discount Rate 11.50%
Terminal Growth Rate 2.00%
Shares Outstanding
(Crore) 29.76
Net Debt Level -530.00
PRESENT VALUE CALCULATIONS
YEAR FCF GROWTH PRESENT VALUE
1 453.39 19% 406.63
2 539.53 19% 433.98
3 642.05 19% 463.17
4 764.03 19% 494.33
5 909.20 19% 527.58
6 1054.67 16% 548.87
7 1223.42 16% 571.02
8 1419.17 16% 594.07
9 1646.23 16% 618.04
10 1909.63 16% 642.99
Final Calculations
Terminal Year 1948
PV of Year 1-10 Cash Flows 5301
Terminal Value 6904
Total PV of Cash Flows 12204
Number of Shares 29.76
DCF VALUE/SHARE (Rs) 410.08

21-01-2019 25
Conclusion
Recommendation
Hexaware Technologies Limited (HTL), founded in 1990 by Atul chandra Nishar, is a global provider
of IT, BPO and consulting services. They serve customers in Banking, Financial Services, Capital
Markets, Healthcare, Insurance, Manufacturing, Retail, Education, Telecom, Professional services
(Tax, Audit, Accounting and Legal), Travel, Transportation and Logistics.
Hexaware has been the fastest organically growing IT services company. Over the past three years,
Hexaware’s revenue growth has outperformed that of peers on an organic basis, led by its ‘Shrink
IT, Grow Digital’ strategy. HT Global IT Solutions Holdings Limited holds 62.66% share in Hexaware
technologies and FII holding is also above 19%.
Hexaware return on capital employed is 34% as compared to its mid - cap peers, whose ROCE is
below 28%. Sales growth is far better than its competitors which is around 11%. So, company has
robust financial growth compared to its competitors.
Majority of the clients of Hexaware are below USD 5 million so any furlough in clients will not hit
its revenue badly. Hexaware announced a global collaboration with Microsoft to accelerate cloud
adoption by enterprises. Hexaware will use Azure in building solutions that improve reliability and
reduce operating costs while transforming customer experiences.
We recommend our Investors to “BUY" the stock with potential upside of 39% with Horizon of 3
years.

21-01-2019 26
Sources
 Annual Report
 Investor Presentation
 Conference Call
 IBEF
 Ace Equity
 Global 2019 Quadrant Report - Mindtree
 Gartner Report
 prnewswire.com - website
 Ministry of Electronics & Information Technology
 Safal Niveshak
Research Analyst Details:
Name Designation Email Id
Tejas Jariwala Research Head tejas.jariwala@jainam.in
Jimit Zaveri Sr. Research Analyst jimit.zaveri@jainam.biz
Vaishali Patel Sr. Research Analyst vaishalip.patel@jainam.biz
Karan Agarwal Assistant Research Analyst karan.agarwal@jainam.biz
Vandana Pareek Assistant Research Analyst vandana.pareek@jainam.biz
Riva Patel Assistant Research Analyst riva.patel@jainam.biz
Radhika Modi Assistant Research Analyst radhika.modi@jainam.biz
Shahrukh Nalbandh Sr. Research Executive shahrukh.nalbandh@jainam.biz
Drashti Patel Jr. Research Executive drashti.patel@jainam.biz
Dhruvish Bakshi Jr. Research Executive dhruvish.bakshi@jainam.biz

21-01-2019 27
Full Form and Glossary
Abbreviation Full Form
ADM Application Development & Maintenance
BFS Banking & Financial Services
BIBA Business Intelligence & Analytics
BPS Business Process Services
CAGR Compound Annual Growth Rate
COGS Cost of Goods Sold
DPS Dividend Per Share
DA Digital Assurance
ES Enterprise Solutions
EBIT Earnings before interest and taxes
EBITDA Earnings before interest, tax, depreciation and amortization
EPS Earning Per Share
EV Enterprise Value
FY Financial Year
H&I Healthcare & Insurance
GP Gross Profit
GTT Global Travel & Transportation
IMS Infrastructure Management Services
MCap Market capitalization
M&C Manufacturing & Consumer
NAV Net Asset Value
NII Net Interest Income
NOI Net Operating Income
NPV Net Present Value
P/E Price/Earnings Ratio
PAT Profit After Tax
PATM Profit After Tax Margin
PBT Profit Before Tax
PS Professional Services
QOQ Quarter on Quarter
RE Retained Earning
ROA Return on Assets
ROCE Return on Capital Employed
ROE Return on Equity
ROI Return on Investment
RONA Return on Net Asset
TTM Trailing Twelve Month

21-01-2019 28
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21-01-2019 29
Disclaimer
Research Analyst Details
Name: Vandana Pareek Email Id: vandana.pareek@jainam.biz Ph: +91 0261-6725518
Analyst ownership of the stock: No
Details of Associates: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their)
personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or
will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
Disclaimer: www.jainam.in is the domain owned by Jainam Share Consultants Pvt. Ltd.
SEBI (Research Analyst) Regulations 2014, Registration No. INH000006448
The views expressed are based solely on information available publicly and believed to be true. Investors are advised
to independently evaluate the market conditions/risks involved before making any investment decision.
This report is for the personal information of the authorized recipient and does not construe to be any investment,
legal or taxation advice to you. This report should not be reproduced to any other person in any form. This document
is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment
decision. Jainam Share Consultants Pvt. Ltd. or any of its affiliates or employees shall not be in any way responsible for
any loss or damage that may arise to any person from any inadvertent error in the information contained in this
report. Neither Jainam Share Consultants Pvt. Ltd., nor its employees, agents nor representatives shall be liable for
any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that
may arise from or in connection with the use of the information. Jainam Share Consultants Pvt. Ltd. or any of its
affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter
pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular
purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Jainam Share Consultants Pvt. Ltd. and/or its
affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this
report. Jainam Share Consultants Pvt. Ltd. has incorporated adequate disclosures in this document. This should,
however, not be treated as endorsement of the views expressed in the report. We submit that no material disciplinary
action has been taken on Jainam Share Consultants Pvt. Ltd. by any regulatory authority impacting Equity Research
Analysis.

Hexaware technologies ltd.

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