Axis securities's research report on Hexaware TechHexaware’s Q4CY15 performance was lower than our estimates. Revenue growth and margin were largely impacted due to furloughs, calendar effect (lower working days), and Chennai floods. Outlook and strategy: Management is targeting to grow higher than industry (NASSCOM: 10-12%) in CY16 (Q1 and Q4 are seasonally soft quarters). Confidence stems from strong deal wins (total contract value: USD 120 mn) in CY15 which lends revenue visibility. However, margin will be similar to CY15 (EBITDA: ~17%). Hexaware’s strategy, "Shrink IT, Grow Digital" is targeted at large clients and has seen early signs of success around IMS, BPO and Testing in its recent wins. Management indicated effort savings of 30-50% in IMS and BPO can be achieved.We expect USD revenue CAGR of 13% overCY15-17E. Our EPS for CY16E/17E stands at Rs 15.7/ 18.2. Our target price of Rs 252 (16x CY16E) implies 7% upside from CMP of Rs. 235; hence we reduce our rating to HOLD (BUY earlier). The stock trades at 15x/13x CY16E/CY17E EPS.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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