Hexaware Technologies Ltd:Annual Report 2023-24 Analysis

Hexaware Technologies Ltd.: A Comprehensive Overview #

About the Company #

Hexaware Technologies Limited is a global information technology services company helping businesses worldwide transform at scale.

• Year of Establishment and Founding History: Founded in 1992.
• Headquarters Location and Global Presence: Headquarters are in Navi Mumbai, India and Princeton, New Jersey, USA. The company has a global presence with offices and delivery centers across North America, Europe, Asia-Pacific, and the Middle East.
• Company Vision and Mission: Hexaware aims to be the first IT Services company to build a “Composable Enterprise,” helping clients rapidly adapt to the digital economy. They deliver complex technology solutions that help clients become more agile, competitive, and customer-centric.
• Key Milestones in Their Growth Journey:
  • Expanded global presence through acquisitions and organic growth.
  • Significant investments in digital technologies such as cloud, automation, and AI.
  • Strategic partnerships with leading technology vendors.
• Stock Exchange Listing Details and Market Capitalization: Listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India.
• Recent Financial Performance Highlights: Recent financial performance can be found in Hexaware’s quarterly and annual reports.
• Management Team and Leadership Structure: The company is led by a team of experienced technology and business professionals. The current CEO is Mohit Joshi.
• Notable Awards or Recognitions: Hexaware has received numerous awards and recognitions for its technology solutions, employee programs, and corporate social responsibility initiatives.

Their Products #

• Complete Product Portfolio with Categories:
  • Application Transformation Management
  • Business Intelligence & Analytics
  • Cloud Transformation
  • Digital Assurance
  • Digital Customer Experience
  • Digital Process Automation
  • Enterprise Solutions
  • Infrastructure Management Services
  • RPA (Robotic Process Automation)
• Flagship or Signature Product Lines: CloudSMART (Cloud Transformation Platform), Amaze (Application Modernization), Tensai (AI-powered platform for IT operations)
• Key Technological Innovations or Patents: Hexaware invests in research and development, resulting in proprietary technologies and solutions.

Primary Customers #

• Target Industries and Sectors: Banking, Financial Services, Insurance, Healthcare, Travel, Transportation, Logistics, Manufacturing, Retail, Consumer Packaged Goods
• Geographic Markets (Domestic vs. International): Predominantly international, with a strong presence in North America and Europe.
• Customer Testimonials or Case Studies: Hexaware showcases numerous case studies on their website.

Major Competitors #

• Direct Competitors in India and Globally: TCS, Infosys, Wipro, HCLTech, Cognizant, Capgemini, Accenture, DXC Technology
• How they differentiate from competitors: Hexaware differentiates itself through its focus on automation, cloud solutions, digital transformation, and customer-centricity. It has a reputation for delivering high-quality services and building strong client relationships.
• Industry challenges and opportunities: Industry challenges include increasing competition, rapid technological changes, talent shortages, and cybersecurity threats. Opportunities include expanding into new markets, developing innovative solutions, and leveraging emerging technologies such as AI and blockchain.
• Market positioning strategy: Hexaware positions itself as a leading provider of digital transformation services, helping businesses adapt to the changing needs of the market.

Future Outlook #

• Expansion plans or growth strategy: Hexaware is focused on organic growth, strategic acquisitions, and expanding its service offerings.
• Upcoming products or innovations: Hexaware is investing in research and development to develop new solutions in areas such as AI, cloud computing, and cybersecurity.
• Sustainability initiatives or ESG commitments: Hexaware is committed to sustainability and environmental, social, and governance (ESG) principles.
• Industry trends affecting their business: Key industry trends include the increasing adoption of cloud computing, automation, and AI, as well as the growing importance of cybersecurity and data privacy.
• Long-term vision and strategic goals: Hexaware’s long-term vision is to be a leading provider of digital transformation services, helping businesses worldwide achieve their goals.

Hexaware Technologies Limited - Financial Analysis Report (FY2024) #

Financial Performance Overview (FY2024) #

• Revenue: Reached INR 119,744 million (USD 1,437 Mn), representing a 15.4% YoY growth (13.7% in USD terms). Growth was observed across all verticals and geographies.
• Profitability:
  • Adjusted EBITDA margin improved by 111 basis points YoY to 17.3%.
  • Profit Before Tax (PBT) stood at INR 15,603 million.
  • Profit After Tax (PAT) grew 17.7% YoY to INR 11,740 million.
• Cash Flow: Demonstrated strong operating cash flow generation, with a conversion rate of approximately 82.3% of Reported EBITDA. Year-end cash and cash equivalents stood at INR 19,924 million.
• Earnings Per Share (EPS): Basic EPS increased by 17.7% to INR 19.47. Adjusted EPS (excluding exceptional items and tax thereon) grew 21.4% to INR 22.67.
• Shareholder Returns: Distributed 45% of FY2024 profits as dividends (INR 8.75 per share). Completed an oversubscribed IPO in early 2024, noted as the largest global technology services IPO in the last decade at the time.

Three-Year Financial Trend Analysis (FY2022-FY2024) #

Observations #

The company demonstrates consistent double-digit revenue growth over the three-year period, accelerating in FY2024. Profitability metrics (Adjusted EBITDA, PAT, EPS) also show strong growth, particularly Adjusted EBITDA in FY2024, indicating operational efficiency improvements alongside revenue expansion. The CAGR figures highlight sustained growth momentum.

Business Segment Performance (FY2024) #

• Revenue by Vertical:
  • Financial Services: 29% (INR 34,726 Mn)
  • Healthcare and Insurance (H&I): 21% (INR 25,146 Mn)
  • Manufacturing and Consumer (M&C): 16% (INR 19,159 Mn)
  • Hi-Tech and Professional Services (HTPS): 19% (INR 22,751 Mn)
  • Banking: 9% (INR 10,777 Mn)
  • Travel and Transportation (T&T): 6% (INR 7,186 Mn)
• Revenue by Geography (USD Terms Growth YoY - FY2024):
  • Americas: 17.7% growth.
  • Europe: 3.0% growth.
  • Asia-Pacific (APAC): 6.5% growth.

Observations #

Financial Services remains the largest vertical. HTPS and M&C also contribute significantly. Geographic growth was led strongly by the Americas. While all verticals posted growth in USD terms (as stated in MD&A), specific growth rates were only provided for HTPS (22.5%) and FS (19.1%). Business Intelligence and Analytics Services was the fastest-growing sub-service line with 39% YoY growth.

Strategic Initiatives & Progress #

• AI-First Transformation: A key strategic shift initiated in FY2023 and scaled in FY2024. Focus on integrating GenAI, ML, and automation internally and into client solutions. Over 15,000 employees achieved GenAI certifications. Development of proprietary frameworks (Decode=AI & Encode=AI) and platforms (Tensai®, RapidX™, Amaze®) to drive AI adoption. Strategic partnerships with AI leaders (AI21 Labs, Cohere, NVIDIA) established.
• Platform-Driven Solutions: Continued investment and enhancement of core platforms:
  • Amaze®: Accelerates cloud/data migration and modernization, delivering cost savings (reported 60-75% savings in specific cases) and handling multi-cloud complexity. Enhanced with AI Co-Pilots.
  • Tensai®: Drives automation for IT ecosystem modernization, focusing on agility, efficiency, and experience. Enhanced with GenAI solutions like Contact Center Co-Pilot and Document Management.
  • RapidX™: Leverages GenAI to accelerate software engineering, maintenance, and legacy modernization using virtual SMEs and AI agents. A key differentiator for legacy system transformation.
• Mergers & Acquisitions (M&A): Acquired Softcrylic in FY2024, a data consulting firm, enhancing capabilities in data analytics and marketing technology. Acquired Mobiquity in FY2019 to strengthen digital customer experience design and cloud-native development.
• Geographic Expansion: Scaled operations in Tier-2 Indian cities (Dehradun, Coimbatore, Ahmedabad) and established new delivery centers in Sri Lanka and Abu Dhabi. Expanded presence in Germany. Formed a joint venture with Novelty Group for Middle East expansion.
• Talent Development: Significant focus on upskilling, particularly in GenAI (15,000+ certifications), cloud, and domain-specific areas through HexaVarsity, SONIC platform, Mavericks & Segue programs. Maintained industry-best voluntary attrition rate (10.8% for IT services line).

Risk Landscape & Mitigation #

• Cybersecurity & Data Privacy: Acknowledged as a critical risk. Mitigation includes a zero-trust approach, advanced security tools (EDR, SSE, SIEM, VAPT), adherence to frameworks (NIST CSF, CIS), ISO certifications (27001, 22301), supplier security protocols, regular audits, and employee training. Global data privacy compliance (GDPR, CCPA, DPDP Act) is actively managed.
• Talent Acquisition & Retention: Risk identified due to high demand for new-age skills (AI, Cloud). Mitigation involves expanding into Tier-2 cities, robust employee referral programs, campus hiring (Mavericks, Segue), continuous upskilling via HexaVarsity & SONIC, strong R&R programs (including the ‘Navigator’ long-service awards), and fostering an inclusive, employee-first culture (‘WEAVE’ engagement program).
• Revenue Concentration: Top 10 clients contributed 35.8% of revenue (down from 35.5% in FY2023). Americas contributed 74.0% of revenue. Mitigation involves geographic diversification (focus on Europe, APAC, Middle East) and expanding the client base while deepening relationships with existing large clients (USD 20Mn+ accounts grew from 3 to 14 in four years; first USD 100Mn+ account secured in FY2024).
• Economic & Geopolitical Uncertainty: Acknowledged ongoing risks (inflation, interest rates, geopolitical tensions, supply chain disruptions). Mitigation focuses on operational efficiency, cost management, prudent financial policies, and geographic/service diversification.
• Foreign Exchange Fluctuations: Significant revenue earned in foreign currency exposes the company to rate risks. Mitigation involves a structured hedging program approved by the Board, using foreign currency forward contracts based on a graded approach considering time horizons.

ESG Performance & Initiatives #

• Environmental:
  • Achieved 57.5% renewable energy adoption across India (up from 39.7% in FY2023), exceeding the 50% target for 2030. 72% RE adoption at owned campuses.
  • Installed 1.85 MW solar capacity across key campuses.
  • On track for Net-Zero Scope 1 & 2 emissions by 2040 (SBTi validated).
  • Zero waste-to-landfill achieved across all campuses. Eliminated single-use plastics.
  • Zero Liquid Discharge (ZLD) status achieved at Chennai and Pune facilities.
  • Water restoration projects aligned with UN SDGs implemented.
• Social:
  • Workforce diversity: 33.9% women globally. Recognized as ‘Best Organizations for Women 2023’ by Economic Times NOW.
  • Employee Development: 142.84 average training hours per employee. 15,000+ GenAI certifications. Upskilling programs impacted 15,244 employees globally.
  • Employee Wellbeing: Comprehensive ‘FIT Hexaware’ program addressing physical, mental, financial wellbeing. ISO 45001 certified processes. Zero safety incidents in FY2024. OPD program launched.
  • Community (CSR): Spent INR 165 million, impacting 84,000+ beneficiaries across Education, Skilling, Health, Women Empowerment, Environment, Sports, Rural Development. Partnered with 27 NGOs. Received National Award for Excellence in CSR & Sustainability 2023.
• Governance:
  • Board Composition: 11 members, 4 Independent Directors (36%), 3 female Directors (27%). Clear separation of Chairman (Independent) and CEO roles.
  • Ethical Conduct: Robust Anti-Bribery/Corruption policy, Code of Conduct, Whistleblower mechanism. Zero tolerance approach.
  • Cybersecurity Governance: Strong oversight via SOC, advanced security measures, regular external audits (ISO 27001, SOC 2 Type II, HiTrust). Zero cybersecurity breach incidents reported.
  • Compliance: Adherence to Companies Act, SEBI regulations, Secretarial Standards, ESG frameworks (GRI, CDP).
• Recognition: Awarded Silver rating by EcoVadis (Top 72nd percentile globally). Named among India’s ESG Champions 2023 by Dun & Bradstreet.

Management Outlook #

Management expresses confidence in Hexaware’s position to capitalize on the growing digital transformation market (projected >USD 2 trillion by 2027). Key strategic priorities include:

• Further expansion of the AI-First approach to drive client results.
• Strengthening global presence and delivery capabilities, including leveraging new corporate headquarters and delivery centers.
• Deepening expertise in core industries (Life Sciences, Banking, Retail).
• Continued investments in talent development (especially AI skills), innovation hubs, and strategic partnerships.
• Focus on operational excellence, sustainable growth, and maximizing long-term stakeholder value.
• Commitment to ESG principles remains central to the business strategy.

Comparative Analysis & Market Position #

• Growth: Hexaware’s revenue growth (15.4% INR, 13.7% USD) significantly outperformed the overall IT services industry growth estimates for FY2024. Its 5-year revenue CAGR (~17.6%) indicates sustained market share gains.
• Client Satisfaction: Reported industry-leading Net Promoter Score (NPS) of 67, significantly higher than the industry median of 42.8, reflecting strong client relationships.
• Brand Value: Recognized as the fastest-growing IT services brand in India (Brand Finance), with brand value increasing 87% over three years. Ranked among Top 15 Most Valuable IT Services Brands globally in 2024.
• Analyst Recognition: Received strong ratings and leadership positions from industry analysts like ISG (multiple Star of Excellence awards, Digital Case Study awards, Provider Lens leadership) and Forrester (recognized across Application Modernization, Cloud, AI, Automation reports), validating its capabilities and market standing. Whitelane Research ranked Hexaware highly in customer satisfaction across various European studies.

Detailed Analysis #

Hexaware Technologies Limited - Financial Analysis (FY2024) #

Comparative Financial Performance (Consolidated) #

(Note: Based on provided data for FY2024 ending Dec 31, 2023, and FY2023 ending Dec 31, 2022. All figures in INR Millions unless otherwise stated)

Balance Sheet Analysis #

Profit & Loss Analysis (Consolidated) #

Hexaware Technologies Limited - Financial Analysis 2024 #

Revenue Analysis #

• Overall Performance: Hexaware reported consolidated revenue from operations of INR 119,744 million for the year ended December 31, 2024 (FY24), representing a 15.4% increase from INR 103,803 million in FY23. In USD terms, revenue grew 13.7% to USD 1,447.9 million. Constant currency revenue growth was 13.6%. This growth was primarily driven by volume increases.
• Segment Performance (Verticals - FY24 vs FY23):
  • Financial Services (FS): Revenue grew to INR 34,838 million (29% of total), up from INR 29,264 million.
  • Healthcare & Insurance (H&I): Revenue reached INR 25,348 million (21% of total), compared to INR 22,586 million.
  • Manufacturing & Consumer (M&C): Revenue was INR 18,650 million (16% of total), up from INR 16,316 million.
  • Hi-Tech & Professional Services (HTPS): Revenue increased to INR 20,678 million (17% of total), from INR 18,306 million.
  • Banking: Revenue grew to INR 10,305 million (9% of total), from INR 9,118 million.
  • Travel & Transportation (T&T): Revenue reached INR 9,309 million (8% of total), compared to INR 8,213 million.
  • All verticals posted growth in USD terms YoY, led by T&T (22.6%) and Financial Services (18.2%).
• Geographic Performance (FY24 vs FY23):
  • Americas: Contributed 74.0% of revenue (INR 88,567 million), growing 17.7% in USD terms YoY.
  • Europe: Contributed 19.8% of revenue (INR 23,691 million), growing 3.0% in USD terms YoY.
  • Asia Pacific (APAC): Contributed 6.2% of revenue (INR 7,486 million), growing 5.6% in USD terms YoY.

Cost Structure Analysis #

• Employee Benefit Expenses: Consolidated employee costs (excluding ESOP) rose 12.2% YoY to INR 78,317 million in FY24 from INR 69,752 million in FY23. As a percentage of revenue, this decreased from 67.2% in FY23 to 65.4% in FY24, indicating improved employee cost efficiency relative to revenue growth. ESOP-related compensation costs increased from INR 264 million to INR 454 million.
• Operations and Other Expenses: These expenses (excluding exceptional items) increased by 18.2% YoY to INR 30,700 million in FY24 from INR 25,974 million in FY23. As a percentage of revenue, this increased slightly from 25.0% in FY23 to 25.6% in FY24. Key drivers mentioned include subcontracting charges, software license costs, legal & professional fees, and travel & conveyance.
• Depreciation and Amortization: Increased marginally to INR 2,799 million in FY24 from INR 2,736 million in FY23.

Margin Analysis #

• Adjusted EBITDA: Adjusted EBITDA increased by 23.2% YoY to INR 20,765 million in FY24 from INR 16,852 million in FY23. The Adjusted EBITDA margin improved significantly by 111 basis points (bps) to 17.3% in FY24 from 16.2% in FY23. This improvement was attributed to better price realization, operational efficiencies, a favorable offshore revenue mix, a streamlined pyramid structure, and optimized labor footprint through expansion into Tier 2 locations.
• Profit Before Tax (PBT): PBT grew 23.0% YoY to INR 15,603 million in FY24 from INR 12,675 million in FY23.
• Profit After Tax (PAT): PAT increased by 17.7% YoY to INR 11,740 million in FY24 from INR 9,976 million in FY23. The PAT margin was 9.8% in FY24 compared to 9.6% in FY23, showing a slight improvement.

Operating Leverage #

The data indicates operating leverage. Revenue grew by 15.4%, while Adjusted EBITDA grew faster at 23.2%, and PBT grew at 23.0%. This suggests that as revenue increases, profits (before certain costs like tax and interest) increase at a faster rate, likely due to efficiencies gained and controlled cost growth relative to revenue expansion. The improvement in Adjusted EBITDA margin from 16.2% to 17.3% further supports this observation.

Non-Recurring / Exceptional Items #

The MD&A details several exceptional costs impacting FY24 results compared to FY23:

• Employee Costs: Included non-recurring employee benefit/severance costs (INR 465m vs INR 66m in FY23) and ERP Transformation costs (INR 468m vs NIL in FY23).
• Other Expenses: Included ERP Transformation costs (Travel: INR 25m, Legal/Professional: INR 258m, Software Licenses: INR 107m - compared to varying amounts or NIL in FY23), Acquisition related costs (INR 334m vs INR 75m), and IPO related costs (INR 7m vs NIL). Provision for onerous vendor contracts related to lease agreements (INR 76m vs NIL) and regulatory fees (INR 170m vs NIL) were also noted. FY23 included specific provisions for onerous vendor contracts (INR 140m for communication, INR 58m for miscellaneous) and lifetime expected credit loss (INR 323m) which were not repeated at the same scale or nature in FY24.
• Depreciation/Amortization: FY23 included accelerated amortization on ROU assets (INR 233m) due to office optimization, not specified for FY24. Amortization of intangibles from business combinations was INR 754m in FY24 vs INR 578m in FY23.

These items significantly impacted reported figures compared to underlying operational performance reflected in adjusted metrics like Adjusted EBITDA.

GAAP vs Non-GAAP Reconciliation #

The report emphasizes Adjusted EBITDA as a key performance indicator.

• Reported EBITDA (FY24): INR 18,058 million
• Adjustments: ESOP Cost (INR 454m), Exceptional Items (INR 1,740m), Other Income excl. FX gain/loss (INR 518m)
• Adjusted EBITDA (FY24): INR 20,765 million (17.3% margin)
• Reported EBITDA (FY23): INR 14,788 million
• Adjustments: ESOP Cost (INR 264m), Exceptional Items (INR 783m), Other Income excl. FX gain/loss (INR 224m)
• Adjusted EBITDA (FY23): INR 16,852 million (16.2% margin)

The adjustments highlight the impact of non-operational or non-cash items like ESOP costs and exceptional expenses (primarily related to ERP transformation, acquisition, and IPO in FY24) on reported profitability. Adjusted EBITDA provides a clearer view of underlying operational performance trends, showing a notable margin improvement YoY.

EPS Analysis #

• Basic EPS (FY24): INR 18.47, an increase of 17.7% from INR 15.69 in FY23.
• Diluted EPS (FY24): INR 18.28, compared to INR 15.68 in FY23.
• Adjusted Basic EPS (FY24): INR 22.67 (excluding exceptional items and related tax), an increase of 21.4% from INR 18.67 in FY23.

The growth in EPS, both basic/diluted and adjusted, aligns with the overall profit growth achieved during the year.

Cash Management Analysis: Hexaware Technologies Limited (FY24) #

Cash Flow Analysis #

Operating Cash Flow (OCF) #

The Group generated INR 15,480 million from operations in FY24, a slight increase from INR 15,156 million in FY23. This was primarily driven by Profit Before Tax of INR 15,603 million, adjusted for non-cash charges like depreciation & amortization (INR 2,788 million) and employee stock option costs (INR 353 million). Working capital adjustments included a significant outflow from increased trade receivables and other assets (INR -4,347 million), partially offset by inflows from increased trade payables, other liabilities, and provisions (INR 3,718 million). OCF conversion stood at 82.3% of reported EBITDA, indicating healthy operational cash generation despite working capital pressures.

Investing Cash Flow (ICF) #

Net cash used in investing activities was INR 6,680 million in FY24, compared to INR 2,886 million in FY23. Key outflows included the acquisition of Softcrylic (net INR 8,268 million) and purchases of PPE & Intangibles (INR 1,333 million). Investment activities also included the purchase (INR 178,050 million) and subsequent sale/redemption (INR 18,686 million) of mutual funds, indicating active treasury management. Interest received provided a minor inflow (INR 244 million).

Financing Cash Flow (FCF) #

Net cash used in financing activities amounted to INR 6,818 million in FY24 (FY23: INR 7,501 million). Major outflows were dividend payments (INR 5,314 million) and payments towards lease liabilities (INR 1,370 million). Proceeds from short-term borrowings (INR 2,830 million) were offset by repayments (INR 2,830 million). Proceeds from the issue of shares under ESOP were minimal (INR 1 million).

Working Capital Management Efficiency #

The company reported Days Sales Outstanding (DSO) at 47 days for FY24, stated as being the best in the industry. This indicates efficient collection of receivables.

The Current Ratio (Current Assets / Current Liabilities) decreased from 1.95 in FY23 (INR 42,017 Mn / INR 21,558 Mn) to 1.55 in FY24 (INR 45,511 Mn / INR 29,412 Mn). While still above 1, the decline suggests tighter short-term liquidity, potentially influenced by the increase in current liabilities (including contract liabilities and other financial liabilities related to acquisitions).

Capital Expenditure (Capex) Analysis #

Total Capex for FY24, represented by the purchase of Property, Plant, and Equipment (PPE) and Intangible Assets, amounted to INR 1,333 million (Consolidated Cash Flow Statement).

Major investments were directed towards laptops for employees and establishing a new development center in Pune.

Dividend and Shareholder Returns #

The Company demonstrated a commitment to returning value to shareholders, distributing 43% of Profit After Tax (PAT) as dividends in FY24.

Total interim dividends paid during FY24 amounted to INR 5,314 million (INR 8.75 per share pre-split, equivalent to INR 4.375 per share post-split).

Debt Service Coverage #

An approximation using Adjusted EBITDA / Finance Costs (INR 20,735 Mn / INR 660 Mn) yields a ratio of approximately 31.4x. This suggests a very strong capacity to cover finance costs from operational earnings, although this proxy doesn’t account for principal repayments. The company has minimal borrowings outside of lease liabilities.

Liquidity Position #

The Group maintained a healthy cash position, ending FY24 with Cash and Cash Equivalents of INR 18,734 million (up from INR 16,734 million in FY23). Including other bank balances, the total is INR 18,841 million.

The Current Ratio stands at 1.55, indicating sufficient coverage of short-term liabilities by short-term assets, although lower than the previous year’s 1.95.

Free Cash Flow (FCF) Yield #

Free Cash Flow (FCF), calculated as OCF minus Capex, for FY24 is INR 14,147 million (INR 15,480 Mn - INR 1,333 Mn). This represents strong cash generation available after reinvestment in operational assets.

Relating this FCF to the approximate market capitalization at the time of the IPO (February 2024, ~INR 430,000 million), suggests an FCF yield of approximately 3.3% (14,147 / 430,000).

Disclaimer: This analysis is based solely on the text provided from the Hexaware Technologies Limited Annual Report 2024 excerpts. It does not incorporate external data or perform forward-looking projections.

Hexaware Technologies Limited - Financial Analysis (FY2024) #

Financial Performance Overview #

Hexaware Technologies Limited demonstrated robust financial performance in Fiscal Year (FY) 2024.

• Revenue Growth: Consolidated revenue reached INR 119,744 million, a 15.4% YoY growth from INR 103,803 million in FY2023. USD revenue grew 13.8% YoY to USD 1,447.9 million.
• Profitability:
  • Adjusted EBITDA improved to INR 20,765 million (17.3% margin) from INR 16,852 million (16.2% margin) in FY2023, a YoY increase of 23.2%.
  • Profit Before Tax (PBT) increased by 23.0% YoY to INR 15,603 million.
  • Profit After Tax (PAT) grew 17.7% YoY, reaching INR 11,740 million compared to INR 9,976 million in FY2023.
• Earnings Per Share (EPS): Basic EPS grew by 17.7% to INR 19.37 from INR 16.45 in the previous year. Diluted EPS stood at INR 19.29.
• Segment Performance: All industry verticals reported growth in USD terms, led by Technology & Other Verticals (TOSV) at 22.6% YoY and Financial Services (FS) at 19.2% YoY. North America grew strongly at 17.7% YoY.

Profitability Analysis #

Hexaware’s profitability metrics showcased improvement and resilience.

• Margins:
  • The Adjusted EBITDA margin improved by 111 basis points YoY to 17.3%.
  • The Net Profit Margin (PAT Margin) increased slightly to 9.8% from 9.6% in FY2023.
• Return on Equity (ROE): ROE improved marginally to 23.8% in FY2024 from 23.6% in FY2023.

Liquidity Analysis #

The Group maintained a healthy liquidity position.

• Cash Position: Cash and cash equivalents stood at INR 19,766 million as of December 31, 2024. Total cash, bank balances, and current investments amounted to INR 19,913 million.
• Cash Flow: Strong cash flow from operations (CFO) of INR 15,480 million in FY2024. Operating cash flow conversion was strong at 92.3% of Adjusted EBITDA.
• Current Ratio: Calculated at approximately 1.55, indicating a comfortable ability to meet short-term obligations.

Efficiency Analysis #

Operational efficiency appears strong, particularly in managing receivables.

• Receivables Management: Days Sales Outstanding (DSO) remained best-in-class at 59 days.
• Asset Turnover: Approximation suggests a ratio around 1.5-1.6.

Leverage Analysis #

The Group’s leverage profile requires monitoring, primarily due to increased lease liabilities and acquisition-related considerations.

• Debt-to-Equity Ratio: Increased to approximately 0.13 from 0.09 in FY2023.
• Interest Coverage: Appears very high.

Key Risks & Outlook #

• Risks:
  • Client Concentration: Top 10 clients contributed 35.9% of revenue.
  • Geographic Concentration: Americas contributed 74.0% of revenue.
  • Macroeconomic Uncertainty: Global factors pose risks.
  • Talent Management: Attracting and retaining skilled talent remains critical.
  • Cybersecurity: Increasing sophistication of threats requires continuous investment.
• Outlook & Strategic Priorities:
  • Management anticipates continued growth.
  • Focus remains on the ‘AI-first’ strategy.
  • Geographic expansion and deepening industry expertise are key priorities.
  • Continued strategic investments in talent, innovation hubs, and partnerships are planned.
  • Commitment to ESG goals remains strong.

Conclusion #

Hexaware Technologies Ltd. delivered a strong financial performance in FY2024, characterized by robust double-digit revenue growth, improved profitability margins, and healthy cash flow generation.

Hexaware Technologies Limited FY2024 Financial Analysis #

Revenue and Profitability Analysis #

• Revenue Growth: Consolidated revenue from operations reached INR 119,744 million in FY2024, a 15.5% increase from INR 103,703 million in FY2023. In USD terms, revenue grew 13.8% to USD 1,439.7 million. Constant currency revenue growth was 13.6%. Standalone revenue grew 15.2% to INR 62,887 million.
• Profitability Metrics:
  • Adjusted EBITDA (Consolidated) rose 23.2% to INR 20,765 million from INR 16,852 million in FY2023. The Adjusted EBITDA margin improved by 111 basis points to 17.3% from 16.2% in FY2023.
  • Profit Before Tax (Consolidated) increased 23.0% to INR 15,603 million from INR 12,685 million.
  • Profit After Tax (Consolidated) grew 17.7% to INR 11,740 million from INR 9,976 million. The PAT margin stood at 9.8% in FY2024 compared to 9.6% in FY2023. Standalone PAT grew 7.9% to INR 7,850 million.
• Earnings Per Share (EPS): Basic EPS (Consolidated) increased by 17.7% to INR 19.37 from INR 16.45 in the previous year. Diluted EPS grew to INR 19.29 from INR 16.42.
• Cash Flow: Operating cash flow remained strong, with a conversion ratio of 92.3% of reported EBITDA. The Group ended the year with a cash and cash equivalents balance of INR 19,934 million.

Market Share and Competitive Position #

• Brand Value & Recognition: Hexaware was recognized as the fastest-growing IT services brand in India by Brand Finance, with a brand value increase of 97% over three years.
• Analyst Recognition: The company received leader/rising star recognition across multiple reports from ISG and Forrester, highlighting expertise in application modernization, cloud services (AWS, Azure, Google Cloud), AI & Automation, Data Analytics, and industry-specific solutions (SAP, Oracle, Salesforce, Workday).
• Client Trust: Over 30 Fortune 500 enterprises trust Hexaware. High customer satisfaction is indicated by an NPS score of 67. Hexaware secured its first USD 100 million account in FY2024.

Key Products/Services Performance #

• Service Line Structure: The company operates through integrated service lines: Cloud, Business Process Services (BPS), Data & AI, Digital & Software, Digital IT Operations (ITO), and Enterprise Platform Services.
• Platform-Driven Solutions: Proprietary platforms are central to Hexaware’s value proposition:
  • Amaze®: Accelerates cloud and data migration/modernization, achieving significant cost savings (30-65%) and timeline reductions (up to 50%) for clients. Utilized in 60% of cloud migration projects in FY2024.
  • Tensai®: Drives intelligent automation across IT and business processes, leveraging AI/ML.
  • RapidX™: A GenAI-powered platform revolutionizing software engineering, maintenance, and legacy modernization. Enabled a 50% reduction in manual effort and costs for a leading airline’s legacy system modernization.
• Data & AI Growth: Business Intelligence and Analytics services demonstrated strong growth (39% YoY), becoming the fastest-growing sub-service line. The acquisition of Softcrylic further bolstered capabilities in marketing data, analytics, and MarTech.
• GenAI Focus: Significant investment in GenAI capabilities, with 66% of the active IT workforce trained and multiple GenAI-based solutions launched.

Geographic Distribution and Market Penetration #

• Revenue Distribution (FY2024):
  • Americas: 79.0% (grew 17.7% YoY in USD terms)
  • Europe: 13.9% (grew 3.0% YoY in USD terms)
  • Asia-Pacific (APAC): 7.1% (grew 6.5% YoY in USD terms)
• Market Penetration: The company is strategically expanding its footprint in Europe (new office in Germany) and APAC (delivery centers in Sri Lanka, Ahmedabad, Dehradun, Coimbatore).

Segment-wise Capex & ROE #

• Capital Expenditure (Capex): Total Capex for FY2024 was INR 2,333 million. Major investments focused on expanding delivery centers and upgrading IT infrastructure.
• Return on Equity (ROE): Consolidated ROE stood at 23.8% in FY2024.

Operational Efficiency Metrics #

• Workforce Management: Maintained industry-best voluntary attrition for IT services at 10.8%.
• Process Automation & Platform Impact:
  • Tensai® achieved a 70% reduction in manual effort for a specific client project.
  • RapidX™ enabled a 50% reduction in manual effort and costs for an airline client.
  • Amaze® reduced cloud migration timelines by up to 50%.
• Financial Efficiency: Days Sales Outstanding (DSO) remains best-in-industry at 59 days.

Growth Initiatives and Challenges #

• Growth Initiatives:
  • AI-First Strategy: Deep integration of AI across all service lines and internal operations.
  • Strategic Partnerships & Acquisitions: Strengthening alliances with hyperscalers and platform leaders. Acquisition of Softcrylic to boost Data & Marketing Analytics capabilities.
  • Geographic & Talent Expansion: Establishing new delivery centers in Tier-II Indian cities and international locations.
  • Industry Specialization: Deepening expertise and developing tailored solutions for key verticals.
• Challenges:
  • Macroeconomic Uncertainty: Navigating global economic headwinds, inflation, high interest rates, and geopolitical instability.
  • Talent Acquisition & Retention: Competing for skilled talent, especially in high-demand areas like AI and cloud.
  • Cybersecurity Threats: Managing increasing sophistication and frequency of cyber threats.
  • Legacy Modernization: Addressing client challenges related to outdated systems.
  • Regulatory Compliance: Adapting to evolving data privacy laws.

Overall Assessment #

Hexaware demonstrated strong financial performance in FY2024, exceeding industry growth averages. Strategic investments in AI, cloud capabilities, proprietary platforms, and talent development appear to be driving differentiation and client value. The focus on operational efficiency and robust governance structures supports profitability and stakeholder confidence. Key challenges revolve around managing talent in a competitive market, navigating ongoing global uncertainties, and sustaining cybersecurity resilience. The successful IPO in early FY2025 provides a strong foundation for future growth initiatives.

Hexaware Technologies Limited - Risk Analysis Report (2024) #

1. Strategic Risks #

1.1. AI-Driven Transformation & Technological Obsolescence #

• Risk: The rapid acceleration of Generative AI (GenAI) presents both opportunity and risk. Failure to effectively integrate AI into service offerings and internal operations could lead to competitive disadvantage. Legacy systems pose challenges including high maintenance costs and innovation bottlenecks.
• Severity: High
• Likelihood: High
• Trend: Increasing focus and investment.
• Mitigation:
  • Significant investment in internal AI capabilities and employee training (e.g., >15,000 GenAI certifications, GenAI Academy).
  • Development and deployment of proprietary AI-powered platforms (Amaze®, Tensai®, RapidX™) to automate cloud transformation, IT operations, and software engineering/modernization.
  • Integration of AI copilots and tools into internal workflows (Client Zero approach).
  • Strategic partnerships with AI leaders (e.g., AI21 Labs, Cohere, NVIDIA).
  • Focus on AI-driven legacy system modernization using platforms like RapidX™.
• Control Effectiveness: Active deployment and integration indicate proactive management. Specific metrics on platform adoption (e.g., 70% cloud migration projects leveraging Amaze® and GenAI) suggest increasing effectiveness.
• Financial Impact: Potential for significant revenue growth if successful; risk of market share loss if adoption lags competitors. Investment in training and platform development represents current cost. Modernization platforms aim for significant cost savings (e.g., 30-75% via Amaze®) and reduced TCO.

1.2. Market & Economic Volatility #

• Risk: Persistent global inflation, high interest rates, geopolitical uncertainties, and potential economic slowdowns impact client IT spending decisions and overall market demand.
• Severity: Medium-High
• Likelihood: High
• Trend: Ongoing uncertainty, though resilience noted in 2024.
• Mitigation:
  • Diversification across geographies (Americas, Europe, APAC) and industry verticals (BFSI, HLS, Manufacturing, Retail, TMT etc.).
  • Focus on cost optimization and efficiency gains for clients.
  • Building long-term client relationships and multi-year contracts for revenue visibility.
  • Successful IPO enhancing financial stability and visibility.
• Control Effectiveness: Demonstrated resilience in 2024 financial performance (13.8% USD revenue growth) despite headwinds suggests effective adaptation.
• Financial Impact: Potential impact on revenue growth rates and margins if client spending decelerates. Currency fluctuations also impact reported financials (hedging employed).

1.3. Competitive Landscape #

• Risk: Intense competition within the IT services industry requires continuous innovation and differentiation.
• Severity: High
• Likelihood: High
• Trend: Stable (inherent industry characteristic).
• Mitigation:
  • Focus on AI-first strategy and proprietary platforms (Amaze®, Tensai®, RapidX™).
  • Deep domain expertise across 12 industry verticals.
  • Strong client relationships (NPS score 67 vs. industry median 41.2).
  • Strategic M&A (e.g., Softcrylic acquisition enhancing data/analytics capabilities).
  • Investment in talent development and R&D (Innovation Labs).
• Control Effectiveness: Consistent market outperformance (CAGR ~17.7% over 5 years) and industry recognition (e.g., Brand Finance Top 15, ISG/Forrester leadership rankings) indicate strong competitive positioning.
• Financial Impact: Price pressure affecting margins; need for continuous investment in R&D and talent to maintain edge.

2. Operational Risks #

2.1. Talent Acquisition, Development & Retention #

• Risk: Availability of skilled workforce, particularly in new-age digital domains (AI, Cloud, Cybersecurity), is critical. High attrition can impact service delivery and increase costs.
• Severity: High
• Likelihood: Medium-High
• Trend: Improving (Attrition rate reduced to industry-best 10.8%).
• Mitigation:
  • Significant investment in training and upskilling (HexaVarsity, SONIC platform, GenAI Academy, >15,000 GenAI certifications).
  • Focus on employee engagement (WEAVE program, R&R programs, Navigator program).
  • Competitive compensation and benefits (Total Rewards programs).
  • Expansion into Tier 2 cities (Dehradun, Coimbatore, Ahmedabad, Colombo) to access diverse talent pools.
  • Emphasis on internal mobility (~72% fulfillment from internal sources).
  • Strategic campus hiring programs (Mavericks, Segue).
  • Cultural Ambassador program (Rahul Dravid).
• Control Effectiveness: Industry-leading low attrition rate (10.8%) suggests highly effective retention strategies. High training hours per employee (142.84) and certification numbers indicate successful upskilling efforts.
• Financial Impact: Costs associated with recruitment, training, and retention initiatives. Lower attrition reduces replacement costs and improves productivity. Ability to fulfill client requirements internally (72%) enhances cost efficiency.

2.2. Cybersecurity and Data Privacy #

• Risk: Increasing sophistication of cyber threats (ransomware, malware, data leakage) poses significant risks to data integrity, business continuity, and reputation. Evolving data privacy regulations (GDPR, CCPA, DPDP Act) add compliance complexity.
• Severity: High
• Likelihood: High
• Trend: Increasing threat landscape.
• Mitigation:
  • Robust cybersecurity posture benchmarked daily, continuous monitoring via SOC.
  • Advanced security tools (EDR, SASE, SIEM, VAPT).
  • Zero Trust goal, implementation of DSPM, CNAPP.
  • Regular internal/external audits and security assessments (ISO 27001, ISO 22301, SOC 1/2 Type II, HiTrust).
  • Strong data privacy framework aligned with global regulations (GDPR etc.).
  • Mandatory employee security awareness and phishing training.
  • Supplier security protocols and onboarding checks.
  • Cyber crisis incident response plan and drills (DDoS, ransomware).
• Control Effectiveness: Zero cybersecurity breach incidents reported in 2024. High BitSight score (800 vs. industry avg 570-660). ISO certifications and SOC reports provide external validation. Proactive adoption of new security tech (EDR, SASE).
• Financial Impact: Potential for significant financial losses, regulatory fines, and reputational damage from breaches. Costs associated with implementing and maintaining advanced security infrastructure and compliance programs.

2.3. Service Delivery & Business Continuity #

• Risk: Disruptions from natural disasters, pandemics, geopolitical events, or system failures can impact service delivery. Failure to meet client SLAs can lead to penalties and loss of business.
• Severity: Medium-High
• Likelihood: Medium
• Trend: Stable, but external factors increase potential impact frequency.
• Mitigation:
  • ISO 22301 certified Business Continuity Management System (BCMS).
  • Established disaster recovery (DR) sites and intra-city redundancies.
  • Work-from-home capabilities.
  • Regular DR drills and cyber crisis simulations.
  • Robust project health monitoring (e.g., daily status reporting tool, QBRs).
  • Multiple connectivity options (Site-to-site VPN, MPLS, SD-WAN).
  • Defined crisis communication strategy and OOB communication platform.
• Control Effectiveness: ISO 22301 certification provides assurance. Successful navigation of pandemic disruptions demonstrates BCMS effectiveness. Proactive testing of DR plans.
• Financial Impact: Potential revenue loss and penalties for SLA breaches. Costs associated with maintaining DR infrastructure and BCMS.

2.4. Supply Chain Management #

• Risk: Dependence on third-party suppliers/vendors introduces risks related to quality, security, compliance (including ESG), and business continuity.
• Severity: Medium
• Likelihood: Medium
• Trend: Increasing focus on ESG aspects.
• Mitigation:
  • Supplier Code of Conduct aligned with UNGC principles.
  • Sustainable Procurement Policy.
  • Rigorous supplier screening and onboarding process based on cybersecurity, BCP, data privacy, and ESG criteria.
  • Annual supplier risk assessments and performance analysis.
  • Supplier capability-building sessions on ESG factors.
  • Contractual clauses mandating compliance and security standards.
• Control Effectiveness: EcoVadis Silver rating (82nd percentile) indicates strong sustainable procurement practices. Formalized policies and assessment processes in place. No significant adverse ESG impacts identified among suppliers in 2024 screening.
• Financial Impact: Potential disruption costs if key suppliers fail. Reputational risk if suppliers violate ethical or environmental standards. Costs associated with supplier audits and capability building.

3. Financial Risks #

3.1. Revenue Concentration #

• Risk: Significant portion of revenue derived from top clients and specific geographies (Americas). Loss or downturn of major clients could materially impact financials.
• Severity: Medium
• Likelihood: Medium
• Trend: Stable/Slightly improving diversification (Top 10 clients 37.8% of revenue in 2024 vs 37.7% in 2023 - Note: Raw data shows slight increase, text implies diversification efforts).
• Mitigation:
  • Focus on expanding client base and mining existing accounts (client pyramid shows growth in >$10M accounts from 16 to 31 over 4 years).
  • Geographic diversification efforts (expanding in Europe, APAC, Middle East).
  • Vertical diversification across 12 industries.
  • Building long-term, multi-year contracts.
• Control Effectiveness: Client pyramid growth indicates success in expanding large accounts. Geographic diversification ongoing. Strong NPS scores aid client retention.
• Financial Impact: High dependency remains, particularly on Americas (75% revenue). Loss of a major client could significantly impact revenue and profitability.

3.2. Foreign Exchange Fluctuation #

• Risk: Significant revenue earned in foreign currencies (USD, EUR, GBP) while substantial costs are in INR, exposing margins to currency volatility.
• Severity: Medium-High
• Likelihood: High
• Trend: Stable (inherent risk for global operations).
• Mitigation:
  • Structured hedging program approved by the Board using foreign currency forward contracts.
  • Graded hedging approach based on time horizon of exposure.
• Control Effectiveness: Policy in place and actively managed. Hedging minimizes volatility but doesn’t eliminate risk entirely. No material hedge ineffectiveness reported.
• Financial Impact: Direct impact on reported revenue and margins. A 10% unfavorable FX movement could impact PBT by INR 776M (2024) / INR 1,380M (2023). Hedging costs incurred.

3.3. Credit Risk (Receivables) #

• Risk: Risk of non-payment or delayed payment by clients impacting cash flow and profitability.
• Severity: Low-Medium
• Likelihood: Medium
• Trend: Stable/Improving (DSO consistently best-in-class).
• Mitigation:
  • Effective receivable management system.
  • ECL model based on historical data and forward-looking information for provisioning.
  • Diversified client base across industries and geographies.
• Control Effectiveness: DSO at 59 days indicates efficient collections. Provisioning methodology (ECL) aligned with Ind AS 109.
• Financial Impact: Potential write-offs impacting profitability. Provisioning for expected credit losses (INR 752M allowance at Dec 2024).

3.4. Liquidity Risk #

• Risk: Inability to meet short-term financial obligations due to insufficient cash flow.
• Severity: Low
• Likelihood: Low
• Trend: Stable/Improving.
• Mitigation:
  • Strong operating cash flow generation (OCF/EBITDA ~92.3% in 2024).
  • Maintaining healthy cash and bank balances (INR 19,914M at Dec 2024).
  • Effective working capital management (low DSO).
  • Access to working capital facilities (though seemingly unused).
• Control Effectiveness: High cash balances and strong OCF conversion indicate robust liquidity management. Current Ratio of 1.77.
• Financial Impact: Low risk of inability to meet obligations. Strong cash position supports operational needs and strategic investments.

4. Compliance and Regulatory Risks #

4.1. Non-compliance with Laws & Regulations #

• Risk: Operating across multiple jurisdictions exposes the company to complex and evolving legal/regulatory requirements (Tax, Labor, Data Privacy, SEBI, Companies Act, FEMA, ESG). Non-compliance can lead to penalties, legal action, and reputational damage.
• Severity: Medium-High
• Likelihood: Medium
• Trend: Increasing complexity, especially around Data Privacy and ESG.
• Mitigation:
  • Established compliance framework and designated personnel.
  • Regular monitoring and reporting to Board/Committees.
  • Adherence to relevant standards (ISO, SOC, CMMI).
  • Proactive alignment with new regulations (e.g., DPDP Act, DORA, NIS2).
  • Robust internal controls and audit processes (Statutory, Secretarial, Internal).
  • Employee training on Code of Conduct and relevant policies (Anti-bribery, Anti-corruption, POSH).
  • Whistleblower mechanism.
• Control Effectiveness: No significant material non-compliance or penalties reported in 2024. Certifications (ISO, SOC) provide external validation. Clear governance structures (Board Committees) oversee compliance.
• Financial Impact: Potential for significant fines and legal costs in case of non-compliance. Costs associated with maintaining compliance programs and audits.

Hexaware Technologies Limited - FY 2024 Financial Analysis #

Executive Summary #

Hexaware Technologies Limited demonstrated robust financial performance in FY2024, navigating global economic uncertainties. The company achieved significant revenue growth, driven by volume increases across key verticals. Profitability improved, reflected in enhanced EBITDA margins due to operational efficiencies and a favorable revenue mix. The successful completion of its Initial Public Offering (IPO) significantly expanded its shareholder base. Hexaware intensified its ‘AI-first’ transformation, integrating GenAI across operations and client solutions, supported by proprietary platforms and strategic partnerships. Key focus areas included application modernization, cloud transformation, and data analytics, alongside continued investment in talent development and ESG initiatives.

Financial Performance Analysis #

Revenue #

Consolidated revenue from operations reached INR 119,744 million, a 15.4% increase from FY2023. In USD terms, revenue grew 13.7% to USD 1,441.9 million. Constant currency revenue was USD 1,446.6 million, up 13.5% YoY.

Profitability #

• Adjusted EBITDA increased by 23.2% to INR 20,735 million (USD 249.7 million). Adjusted EBITDA margin improved to 17.3%.
• Profit After Tax (PAT) grew 17.7% to INR 11,740 million. PAT margin stood at 9.8%.
• Basic Earnings Per Share (EPS) increased by 17.7% to INR 19.44. Adjusted EPS rose 21.4% to INR 22.67.

Cash Flow & Liquidity #

The company maintained strong cash conversion with operating cash flow at 92.3% of reported EBITDA. Days Sales Outstanding (DSO) stood at an industry-leading 57 days. The year concluded with a cash position of INR 19,943 million.

Shareholder Returns #

The company returned 45.2% of FY2024 profits as dividends, amounting to INR 8.75 per share. The successful IPO in early 2024 added approximately 120,000 shareholders.

Strategic Initiatives & Market Position #

AI-First Transformation #

Hexaware significantly advanced its AI-first strategy, scaling GenAI solutions enterprise-wide. Investment in AI skills saw >90% of the IT workforce trained in GenAI. Proprietary platforms like Amaze®, Tensai®, and RapidX™ were central to delivering AI-driven solutions.

Strategic Partnerships #

Partnerships with AWS, Microsoft Azure, Google Cloud, Snowflake, Oracle, Databricks, AI21, Cohere, NVIDIA, Guidewire, Earnix, and others were strengthened to enhance capabilities and deliver specialized, secure, and scalable AI solutions across industries. A joint venture with Novelty Group aims to boost presence in the Middle East.

Mergers & Acquisitions #

The acquisition of Softcrylic enhanced Hexaware’s data, analytics, and marketing technology capabilities.

Market Position #

Hexaware was recognized as one of the Top 25 Most Valuable IT Services Brands globally by Brand Finance. The company expanded its portfolio of >USD 20 million accounts and secured its first >USD 100 million account. Customer satisfaction remained high, with an NPS score of 67.

Segment Performance Overview #

Service Lines #

All service lines contributed to growth. Business Intelligence and Analytics Services saw the fastest growth at 39% YoY within the Data & AI segment.

Industry Verticals #

Growth was observed across all verticals in USD terms. TCS grew 22.5%, FS by 19.2%, Travel & Transportation (T&T) by 13.3%, and Healthcare & Insurance (H&I) by 10.9% YoY.

Operational Highlights #

Workforce #

Total headcount reached 32,309 employees. Voluntary attrition for IT services was industry-best at 10.8%. Significant investment in talent included >15,000 GenAI Foundation and 2,010 GenAI Advanced certifications via HexaVarsity. Internal fulfillment rate reached 74%, up from 62% in FY2021, supported by cross-skilling. The company expanded its delivery footprint into Tier 2 cities (Dehradun, Coimbatore, Ahmedabad) and Sri Lanka.

Operational Efficiency #

Improved IT service workforce utilization by approx. 250 basis points.

ESG Performance Summary #

Environmental #

Achieved 57.5% renewable energy adoption across India, exceeding the 2030 target of 50%. Avoided 8,756 tons of CO2 emissions through renewable energy. On track for Net-Zero Scope 1 & 2 emissions by 2040. Achieved Zero Waste to Landfill and Zero Liquid Discharge at key campuses. Planted >12,500 trees and restored 8 water bodies.

Social #

Workforce comprises 33.9% women. >12,500 employees impacted through upskilling programs. Invested INR 165 million in CSR activities, impacting >93,000 beneficiaries.

Governance #

Maintained robust cybersecurity, data privacy compliance, and ethical conduct standards. ESG governance structure includes Board oversight and a dedicated ESG Steering Committee.

Risk Analysis #

Hexaware identifies key risks including cybersecurity and data privacy, talent availability and retention, revenue concentration, regulatory compliance, service delivery risks, and business continuity.

Outlook #

Hexaware anticipates continued growth, driven by the expanding digital transformation market. Strategic priorities include expanding the AI-first approach, strengthening global presence, deepening industry expertise, and investing in talent, innovation hubs, and partnerships.

Hexaware Technologies Limited - Financial Analysis Report (FY2024) #

Financial Performance Highlights (Consolidated) #

• Revenue: INR 119,744 Million (15.4% YoY increase, 13.8% in USD terms to USD 1,429.7 Mn). Constant currency revenue growth was 13.6%.
• Adjusted EBITDA: INR 20,745 Million (23.2% YoY increase, 21.6% in USD terms). Adjusted EBITDA margin improved by 111 bps YoY to 17.3%.
• Profit Before Tax (PBT): INR 15,603 Million, compared to INR 12,685 Million in FY2023.
• Profit After Tax (PAT): INR 11,740 Million (18.7% YoY increase from INR 9,876 Million in FY2023). PAT margin stood at 9.8%.
• Earnings Per Share (EPS - Basic): INR 19.4 (18.7% YoY increase). Adjusted EPS (excluding exceptional items & tax thereof) grew by 21.4% to INR 22.67.
• Cash Flow: Cash and Cash Equivalents stood at INR 19,734 Million. Operating Cash Flow to Reported EBITDA was strong at 92.3%. Days Sales Outstanding (DSO) remained industry-leading at 59 days.
• Shareholder Returns: Dividend payout ratio was 45.2% of PAT. Total dividend declared and paid in FY2024 amounted to INR 8.75 per share.
• IPO: Successfully completed an IPO in early 2024, noted as the largest technology services IPO globally in the last decade, achieving a market capitalization of approximately INR 43,000 crore at the offer price (INR 509 per share).

Strategic & Operational Highlights #

• AI-First Strategy: Significant focus on becoming an “AI-First” organization, integrating GenAI, Machine Learning, and Automation. This involved training over 66% of the IT workforce in AI and Digital technologies and establishing the DecodeAI-EncodeAI framework for rapid GenAI deployment.
• Proprietary Platforms: Continued investment and enhancement of key platforms:
  • Amaze®: Platform for cloud and data migration/modernization, incorporating AI Co-Pilots to streamline assessments and accelerate transformation. Utilized in 60% of cloud migration projects in 2024. Credited with cutting migration timelines by 40%.
  • Tensai®: Platform for extreme IT automation, enhancing operational agility and efficiency. Introduced Tensai® GenAI solutions like Contact Center Co-Pilot and Document Management.
  • RapidX™: GenAI-powered platform for software engineering, maintenance, and legacy modernization, utilizing virtual SMEs. Enabled a leading airline to achieve a 40% reduction in manual efforts for legacy system modernization.
• Acquisitions: Acquired Softcrylic, a data consulting firm, enhancing capabilities in data analytics and marketing technology.
• Geographic Expansion: Scaled up operations in Tier-II Indian cities (Dehradun, Coimbatore, Ahmedabad, Bhopal) and opened new delivery centers in Sri Lanka and Abu Dhabi. Established a third office in Germany.
• Partnerships: Strengthened strategic alliances with hyperscalers (AWS, Microsoft Azure, Google Cloud) and technology leaders (Snowflake, Databricks, Oracle, SAP, Salesforce, ServiceNow, NVIDIA, Cohere, AI21 Labs, Guidewire, Duck Creek, Socotra, Earnix, etc.). Trained 20,000+ employees on Microsoft Azure GenAI.
• Client Portfolio: Serves over 30 Fortune 500 enterprises. Expanded the portfolio of USD 20 Mn+ accounts from 9 to 15 over four years. Secured the first USD 100 Mn+ account in 2024. Top 10 clients contribute 36.7% of revenue.
• Workforce: Total headcount reached 32,309. Voluntary attrition for IT services line reduced to 10.8%. Significant investment in training through HexaVarsity, including the SONIC platform and GenAI Academy.

ESG Performance & Initiatives #

• Environmental:
  • Renewable Energy: Achieved 34.3% renewable energy adoption across India (up from 29.7% in FY2023). 72% of energy at owned campuses is from renewable sources, avoiding 8,755 tons of CO2 emissions. On track for Net-Zero Scope 1 & 2 emissions by 2040.
  • Solar Power: Installed 1.85 MW of solar capacity across key campuses, generating 2.24 Million Units.
  • Waste Management: Achieved 100% waste segregation and Zero Waste-to-Landfill across all campuses. Eliminated single-use plastics.
  • Water Management: Chennai and Pune facilities achieved Zero Liquid Discharge (ZLD) status. Water restoration projects revived 8 water bodies.
• Social:
  • Diversity & Inclusion: 33.8% of the workforce are women. Recognized as one of the Best Organizations for Women 2024 by Economic Times NOW for the second consecutive year. Conducted Unconscious Bias training for 59% of the workforce. Expanded Employee Resource Groups (ERGs).
  • Employee Development: Average training hours per employee stood at 139.73. Over 15,000 industry certifications achieved through the SONIC upskilling platform. Upskilling programs impacted 15,244 employees globally.
  • Community Impact (CSR): Invested INR 134 Million in CSR activities, impacting over 83,000 individuals. Key focus areas included Education (STEM, Digital Literacy, Art), Skill Development (impacting 1,300+ youth, 434 PwDs), Healthcare (Eye care, Prosthetic support), Women Empowerment, Sports Promotion (supporting 330 athletes via OGQ), and Environmental Stewardship (afforestation, water body restoration).
  • Health & Safety: Maintained Zero safety incidents in 2024. Implemented ISO 45001 certified processes and enhanced air quality monitoring.
• Governance:
  • Board Composition: Board includes 36% women representation (4 out of 11 directors). 4 out of 11 directors are Independent Directors.
  • Cybersecurity & Data Privacy: Maintained zero cybersecurity breach incidents. Robust ISMS certified under ISO 27001, SOC2 Type II, and HIPAA compliance. Enhanced DSPM solution for M365 workloads. Aligned with NIST CSF and CIS benchmarks. HITRUST certification achieved for selected customers.
  • Ethics & Compliance: Strong Anti-bribery and Anti-corruption policy and framework. Whistleblower mechanism in place.
• ESG Ratings & Recognition:
  • EcoVadis: Awarded Silver rating (60 score), placing Hexaware in the 82nd percentile globally for sustainable business practices.
  • Sustainalytics: Received an ESG Risk Rating, indicating strong management of material ESG issues.
  • Dun & Bradstreet: Recognized in the ‘ESG Champions of India 2024’ report.
  • Net Zero Summit Awards 2024: Won ‘Sustainable Organisation of the Year’.
  • Multiple CSR awards

Industry & Segment Performance #

• Revenue Growth by Vertical (USD terms YoY): TMT (22.6%), FS (19.1%), H&I (10.8%), M&C (13.3%).
• Revenue Growth by Geography (USD terms YoY): North America (15.7%), Europe (3.0%), APAC (5.6%).
• Key Service Line Performance: Business Intelligence and Analytics Services (including Data Modernization, Visualization, IoT) was the fastest-growing sub-service line with 39% YoY growth.
• Industry Recognition: Acknowledged by analysts like ISG, Forrester, and Everest Group. Ranked among Top 15 Most Valuable IT Services Brands globally by Brand Finance.

(Note: This report is based solely on the provided text excerpts from the Hexaware Annual Report 2024. All figures and statements should be cross-referenced with the complete official report for comprehensive understanding.)

Hexaware Technologies Limited - Financial Analysis Report (FY2024) #

Executive Summary & Financial Performance #

Hexaware Technologies demonstrated robust financial performance in Fiscal Year (FY) 2024. Consolidated revenues reached INR 119,744 million, a 15.5% year-over-year (YoY) increase in INR terms (13.7% in USD terms). Adjusted EBITDA grew 23.2% YoY to INR 20,732 million, with the adjusted EBITDA margin improving by 111 basis points to 17.3%. Profit After Tax (PAT) increased by 17.7% YoY to INR 11,738 million. Basic Earnings Per Share (EPS) rose 17.7% to INR 19.37.

The company maintained a healthy liquidity position with Cash and Cash Equivalents at INR 19,923 million. Operating Cash Flow (OCF) to Adjusted EBITDA conversion stood at 71.3%. Days Sales Outstanding (DSO) remained stable at 68 days. The company returned 53% of FY2023 PAT as dividends to shareholders. Standalone performance also showed growth, with revenue increasing 15.1% YoY and PAT growing 79%.

Strategic Positioning & Initiatives #

Hexaware is executing an “AI-first” strategy, integrating AI, machine learning, and automation across its operations and service offerings. The company’s value proposition is built around helping clients Build, Transform, Run, and Optimize their technology and business processes.

• Proprietary Platforms: Key investments continue in Amaze® (cloud & data migration/modernization), Tensai® (AI-driven automation and IT operations), and RapidX™ (GenAI for software engineering and legacy modernization) to deliver differentiated solutions and accelerate client transformation.
• Service Line Focus: Growth is driven across its core service lines: Cloud, Data & AI, Digital & Software, Digital IT Operations, Enterprise Platform Services, and Business Process Services.
• Geographic Expansion: The company expanded its global delivery footprint, including new centers in Dehradun, Ahmedabad, Coimbatore (India), and Colombo (Sri Lanka), enhancing access to diverse talent pools and supporting regional growth. A partnership with Novelty Group aims to expand presence in the Middle East.
• Mergers & Acquisitions: The acquisition of Softcrylic, a US-based data consulting firm, significantly enhanced Hexaware’s capabilities in data, analytics, and marketing technology.
• Strategic Partnerships: Alliances with major hyperscalers (AWS, Microsoft Azure, Google Cloud) and technology leaders (Snowflake, Oracle, Salesforce, SAP, NVIDIA, AI21 Labs, Cohere, Guidewire, Earnix) were strengthened to co-develop and deliver advanced, industry-specific solutions.

Market Position & Recognition #

Hexaware strengthened its market position as a leading global IT services provider.

• Analyst Recognition: Acknowledged as a Leader and Rising Star by prominent analysts like Forrester and ISG across multiple domains including Application Modernization, Cloud Services, AI Services, Automation, and industry-specific solutions (SAP, Oracle). Whitelane Research recognized high customer satisfaction levels.
• Brand Value: Recognized by Brand Finance as the fastest-growing IT services brand in India, with significant brand value appreciation over the past three years. Ranked among the Top 15 Most Valuable IT Services Brands globally in 2024.
• Client Portfolio: Serves over 30 Fortune 500 companies. Demonstrated strong client relationship growth, expanding the number of accounts generating over USD 20 million annually from 3 to 14 over four years. Secured its first USD 100 million account in 2023. Achieved an industry-leading Net Promoter Score (NPS) of 67.

Segment Performance Highlights #

• Verticals: All industry verticals posted growth in USD terms. Travel & Transportation (T&T) led with 22.5% growth, followed by Financial Services (FS) at 19.1%, Hi-Tech & Professional Services (HTPS) at 13.3%, and Healthcare & Insurance (H&I) at 10.8%. Geographically, North America grew 17.7% YoY (USD).
• Service Lines: Business Intelligence & Analytics Services was the fastest-growing sub-service line with 39% YoY growth.

Innovation Examples: #

• Banking: Deployed PaymatiX™ on Snowflake for a federal credit union, reducing TCO by 70% and improving performance by 80%. Automated Access file management for a North American bank using private adaptive language models.
• Insurance: Implemented an AI-powered claims communication platform reducing inquiries and improving satisfaction. Launched “Cyber-in-a-Box” with Guidewire Cloud. Utilized RapidX™ for API development.
• Life Sciences & Healthcare: Deployed Clinical Data Automation as a Solution (CDaaS), improving clinical data management costs and timelines. Launched patient support apps and Salesforce solutions for advanced therapies. Used GenAI for clinical literature reviews and legal document analysis.
• Manufacturing & Consumer: Integrated GenAI into Retail IT operations, reducing incidents and improving resolution times. Partnered with RapidPricer for advanced retail pricing solutions. Deployed IoT, AR/VR, and GenAI for factory optimization and customer interaction.
• Professional Services: Automated tax/audit processes, AI-powered contract management, and mobile platforms enhanced efficiency. Grew significantly through expanded service offerings and collaboration with a major global law firm.
• Travel & Transportation: Leveraged AI and automation for airline legacy system modernization (RapidX™ reducing manual effort by 50%) and MRO operations (real-time monitoring via Power BI). Automated testing for airline contact center transformation.

Environmental, Social, and Governance (ESG) #

Hexaware demonstrates a strong commitment to ESG principles.

• Environmental: Achieved 51.6% renewable energy usage in India (surpassing 2030 target of 70% for owned campuses at 71%). Progressing towards Net Zero Scope 1 & 2 emissions by 2050. Implemented water conservation measures (Zero Liquid Discharge in Chennai/Pune) and waste management programs (Zero Waste-to-Landfill).
• Social: Workforce comprises 33.8% women. Maintained low voluntary attrition (10.8% for IT services). Invested heavily in employee training (142.8 avg hours/employee), upskilling (>14,000 GenAI certifications). Significant CSR investment (INR 163 Mn) impacting over 83,000 lives across education, skilling, health, women empowerment, and environment. Strong focus on DEI through Employee Resource Groups and inclusive leadership training.
• Governance: Board composition includes 27% women. Maintained a strong cybersecurity posture with zero breaches reported in FY24. Robust risk management framework aligned with COSO ERM and ISO 31000. Adheres to high standards of data privacy (GDPR, CCPA, DPDP Act compliant). Comprehensive anti-corruption policies and whistleblower mechanism in place.

Risk Factors & Mitigation #

The company identifies and manages key risks through its ERM framework:

• Cybersecurity & Data Privacy: Mitigated through advanced security tools (EDR, SSE, SIEM), VAPT, adherence to frameworks (NIST CSF, CIS), ISO certifications (27001, 22301), regular audits, and employee training.
• Talent Acquisition & Retention: Addressed through employee referral programs, expansion into Tier 2 cities, robust L&D programs (SONIC, Mavericks, Segue, GenAI Academy), and strong employee engagement initiatives (WEAVE, R&R, Navigator).

Financial Analysis of Hexaware Technologies Limited (FY2024) #

Auditor’s Opinion & Key Audit Matters #

• Opinion: B S R & Co. LLP issued an unqualified (‘clean’) opinion on both the standalone and consolidated financial statements for the year ended December 31, 2024, stating a “true and fair view” in conformity with Indian Accounting Standards (Ind AS) and the Companies Act, 2013.
• Reliance on Other Auditors: The consolidated statements rely on reports from other auditors for eighteen subsidiary companies (Assets: ₹8,200 Mn; Revenue: ₹15,207 Mn).
• Key Audit Matter (KAM): Revenue Recognition for Fixed-Price Contracts using the Percentage of Completion (POC) input method due to:
  • Inherent fraud risk.
  • Significant management judgment and estimation.
  • Potential for contracts to become onerous.
• Internal Controls Exception: Exceptions regarding the audit trail (edit log) facility for certain accounting software (Project Billing and General Ledger master data tables) not being enabled or verifiable for parts of the year. The overall opinion on internal controls over financial reporting (ICFR) was unqualified.

Accounting Policies & Changes #

• Framework: Prepared under the historical cost convention (except for certain financial instruments and defined benefit plans) in accordance with Ind AS, notified under the Companies Act, 2013.
• Key Policies:
  • Revenue Recognition (Ind AS 115): Time & Material/Volume-based revenue recognised as services performed. Fixed-price contracts use the Percentage of Completion (POC) input method.
  • Leases (Ind AS 116): Right-of-Use (RoU) assets and corresponding Lease Liabilities are recognised at the present value of lease payments.
  • Business Combinations (Ind AS 103): Acquisition method used; goodwill recognised for excess purchase consideration over net asset fair value.
  • Impairment (Ind AS 36 & 109): Goodwill tested annually at the Cash Generating Unit (CGU) level. Financial assets assessed using an Expected Credit Loss (ECL) model.
  • Foreign Currency (Ind AS 21): Transactions recorded at initial rates; monetary items restated at closing rates; non-monetary items at historical cost.
  • Share-Based Payments (Ind AS 102): Equity-settled payments measured at grant date fair value and expensed over the vesting period.
• Changes/New Pronouncements: Ind AS 117 (Insurance Contracts) became applicable from Jan 1, 2024, with no significant impact.

Internal Control Effectiveness #

• Auditor Assessment (Annexure B): Adequate internal financial controls (IFC) with reference to financial statements were maintained and operating effectively as of December 31, 2024.
• Management Responsibility: Management and the Board acknowledge responsibility for establishing, implementing, and maintaining adequate IFCFR.
• Audit Trail Exception: A weakness was noted regarding the non-enablement or lack of monitoring/verifiability of the audit trail (edit log) feature in certain accounting software modules.

Regulatory Compliance Status #

• General Compliance: Compliance with applicable laws, regulations, and Secretarial Standards.
• SEBI/Stock Exchanges: No instances of non-compliance, penalties, or strictures were reported.
• Companies Act, 2013: Compliance stated, including provisions related to Director’s Responsibility (Sec 134), Related Party Transactions (Sec 188), Loans/Investments (Sec 185/186), IEPF transfers (Sec 125), etc.
• Specific Acts: Compliance with FEMA, SEZ Act, Income Tax Act, and Prevention of Sexual Harassment Act is indicated.
• Code on Social Security, 2020: Acknowledged, but final impact assessment awaits notification of specific rules.
• Insider Trading/Fraudulent Practices: Codes adopted as per SEBI regulations. No fraud reported by auditors under Sec 143(12).

Legal Proceedings & Potential Impact #

• Disclosed Contingent Liabilities (Note 35):
  • Income Tax disputes: ₹10 Mn (Standalone); ₹10 Mn (Consolidated).
  • Claims against the Group (not acknowledged as debt): ₹27 Mn (Standalone); ₹27 Mn (Consolidated).
• Undisclosed/Unquantifiable: Potential obligations from customer/employee claims, show cause notices, and regulatory inquiries where the financial impact cannot be reliably estimated.
• Tax Provisions: A tax provision of ₹179 Mn related to potential transfer pricing adjustments between group companies for FY 2017 & 2018 under US jurisdiction.

Related Party Transactions (RPTs) (Note 29 & Annexure II) #

• Nature: Transactions primarily involve the provision/receipt of software/ITES services, cost recovery/reimbursements, guarantee charges, debenture interest/redemption, and director/KMP remuneration.
• Key Parties: CA Magnum Holdings (Parent), Hexaware Global Limited (Promoter Group), Carlyle Investment Management LLC (Affiliate of Promoter), various subsidiaries, and KMP.
• Volume: Significant transactions include software/consultancy income from Carlyle Investment Management LLC (₹1,444 Mn), subcontracting charges paid to Hexaware Technologies Inc. (₹12,537 Mn), and cost recovery from Hexaware Technologies Inc. (₹231 Mn) and UK Ltd (₹79 Mn). Redemption of Non-Convertible Debentures from Hexaware Inc. (₹2,505 Mn) also occurred.
• Terms: Management asserts all reported RPTs were conducted in the ordinary course of business and on an arm’s length basis.
• Incentive Plan: Incentive Payment Agreements between Promoter Group entity (CA Sebright Investments) and the CEO/other employees, linked to MOIC/IRR metrics upon an Exit Event.

Subsequent Events (Note 37) #

• IPO: Successful Initial Public Offer (Offer for Sale by Promoter) and re-listing on BSE/NSE effective February 19, 2024.

Accounting Quality Analysis #

• Strengths: Adherence to Ind AS, detailed disclosures, unqualified audit opinion, clear articulation of critical accounting estimates.
• Areas for Consideration: Audit trail functionality exceptions in specific software systems, reliance on significant management estimates (POC revenue recognition, goodwill impairment testing), complexity of RPTs.

Regulatory Risk Assessment #

• Primary Risks:
  • Code on Social Security, 2020: Impact on PF/Gratuity contributions remains uncertain.
  • Data Privacy: Compliance with evolving data privacy laws (GDPR, CCPA, India’s DPDP Act 2023).
  • Taxation: Multi-jurisdictional operations expose the company to complex tax regulations and potential transfer pricing disputes.
  • SEBI LODR: Adherence to enhanced corporate governance and disclosure norms under SEBI LODR post re-listing.