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Hexaware Q2 tops estimates on volume growth, new deals

Hexaware Q2 tops estimates on volume growth, new deals
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First Published: Wed, Jul 27 2011. 11 28 AM IST
Updated: Wed, Jul 27 2011. 11 28 AM IST
Mumbai: Software services firm Hexaware Technologies Ltd on Wednesday reported a June-quarter consolidated net profit that outpaced expectations and raised its revenue outlook for 2011 on the back of volume growth across all verticals and new deals.
Shares of the Mumbai-based firm, which the market values at $521.93 million, jumped as much as 4.5% to a four-year high of 83.20 rupees in morning trade. The stock has run up 37% so far this year.
Hexaware, which follows a calendar year, raised its revenue outlook for the second time this year to expect a minimum of $302 million. It had earlier forecast revenue of at least $295 million for the year.
For the September quarter, the company expects revenue of $78 million to $79 million.
“While we continue to watch the macroeconomic developments closely, the quantum of the deals signed and the quality of the current business pipeline provides us with the perfect platform to deliver above-industry performance,” chief executive P.R. Chandrasekar said in a statement.
The company expects to either sustain or improve its operating margins over the next two quarters.
For the April-June quarter, Hexaware, which added 14 new clients, saw its operating (Ebitda) margins rise 100 basis points to 15.3%, despite doling out wage hikes, it said.
Most mid-cap IT companies were set for a squeeze in margins for the April-June quarter brought about by wage hikes and higher taxes.
The company posted a consolidated net profit of Rs 60.24 crore, compared with Rs 14.4 crore a year ago. A Reuters poll of brokerages had forecast the firm to post a profit of Rs 47.26 crore.
Revenue jumped 33% to Rs 334 crore, while the Reuters poll of brokerages had estimated revenue of Rs 336 crore.
The company posted a foreign exchange gain of Rs 16.27 crore during the April-June quarter, compared with a loss of Rs 19.18 crore the previous year.
Hexaware’s hedging strategy was not favourable earlier and the company would suffer considerable foreign exchange losses, an analyst from local brokerage Asit C. Mehta Investment Intermediates said.
“But that changed from the third quarter of last year. Now the firm is also winning transformational deals in a multi-vendor environment and this has pushed us to believe in Hexaware’s growth story,” he said. “This year looks very bright for Hexaware.”
During the June quarter, Hexaware signed a deal worth more than $25 million with an existing European client for providing remote infrastructure management services.
Last week, Hexaware signed its largest contract ever with a US-based client. The deal could help Hexaware earn $177 million over five years.
Hexaware, which recruited 145 fresh engineers during the quarter, said it intends to add 250 fresh engineers during the September quarter.
At 10.38 a.m., shares were trading up 3% at Rs 82 in a choppy Mumbai market.
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First Published: Wed, Jul 27 2011. 11 28 AM IST