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MUMBAI: IT midcap firm Hexaware Technologies, whose March quarter results met analysts' expectations, has said even as the company has given payment concessions to a few clients due to the lockdown globally, it expects growth for its top clients in the coming quarters.

Hexaware's consolidated net profit rose 4.27% quarter-on-quarter to 174.96 crore in January-March on revenue of 1541.75 crore, which was up 0.85%. Earnings before interest, tax, depreciation and amortization (Ebitda) fell 2.54% to 233.60 crore in March quarter as against 239.70 crore in December quarter.

In view of the uncertainty caused by the covid-19 pandemic, the company said it was withdrawing the guidance provided earlier for calendar 2020. “In aggregate across our top 5 customers (34% revenue share), due to the nature of businesses that they are in, we see a net positive going forward. In some cases, there will be a sharp recovery in Q2 while in some case there won’t even be a dip," R. Srikrishna, CEO and executive, Hexaware told Mint. Like other IT peers, Hexaware has noted that clients have concerns over payments and are ready to support them through these times.

The company's net profit was largely aided by significant forex gains, while $69 million order intake was the highest in recent quarters, noted analysts.

Among verticals, travel and transportation was the worst hit with 5.1% sequential decline in revenue which the company had already guided for. Europe showed 65.4% YoY growth. Among the verticals, hi-tech and professional services grew (29.8%), healthcare and insurance (28.6%), travel and transportation (21.9%), manufacturing and consumer business (18.8%) and banking and financial services grew 5.6%. In the horizontals, YoY growth was led by application transformation management (44.1%) and business process services (29.7%).

Some of the top clients are in secondary mortgage space and are likely to grow while those in professional services and asset services will continue to remain positive, he added.

Srikrishna also noted that in the short term market share and customer relationships will take priority over utilization of employees, but utilization will catch up by Q3 and normalize by Q4. The company has also onboarded 150 freshers during the quarter but it is less aggressive about future hiring.

Hexaware sees the current crisis providing opportunities for share gains but expects meaningful weakness in revenues and margins in the June quarter.

“Hexaware reported a 1.1% QOQ cc revenue decline for the Q1 (compared to estimates of 2.3% QoQ constant currency decline), with EBIT margins coming in at 11.8% (down by 160 basis points sequentially). We note that the quarterly EBIT margin performance was the weakest since Dec’10 quarter levels," noted Emkay Securities in a report.

The brokerage also noted that Hexaware has very little net cash compared to peers and its intent to defer dividend could be driven by an aim to conserve cash as clients ask for delayed payment terms along with price discounts.

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