Hexaware Technologies has announced its Q1 FY26 results (Q2CY25), and the performance is turning heads across Dalal Street. With robust profit growth, a bold move into AI, and rising margins — could Hexaware be an under-the-radar winner in India’s mid-cap IT space?
Let’s break down the numbers and understand what’s working, what’s not, and what it means for investors.
🔍 Quick Snapshot: Hexaware’s Q1 FY26 Financial Performance
| Metric | Q1 FY26 (Q2CY25) | QoQ | YoY |
|---|---|---|---|
| Revenue (INR) | ₹32,607 Mn | +1.6% | +11.1% |
| Revenue (USD) | $382.1 Mn | +2.8% | +8.6% |
| EBITDA Margin | 17.2% | +53 bps | +156 bps |
| Net Profit (PAT) | ₹3,797 Mn | +16.1% | +38.3% |
| EPS (Basic) | ₹6.25 | +16.2% | +37.7% |
💡 Investor Hook: Strong EPS growth with expanding profitability — could this signal a stock re-rating?
🧠 Segment-Wise Performance: What’s Driving the Growth?
Hexaware’s balanced industry presence helped it navigate market uncertainty.
🚀 Top Performing Verticals (YoY Growth in USD terms):
- Travel & Transportation: +23.4%
- Financial Services: +15.7%
- Technology & Professional Services: +14.1%
- Banking: +7.1%
- Healthcare & Insurance: +6.6%
⚠️ Under Pressure:
- Manufacturing & Consumer: -11.5% (YoY)
🎯 Insight: Travel, tech, and finance are propelling growth. Consumer-linked verticals are still under macro stress.
🌍 Regional Revenue Growth
| Region | YoY Growth (USD) |
|---|---|
| Americas | +10.3% |
| Europe | +7.9% |
| Asia Pacific | -8.3% |
📉 Observation: Strength in the US and EU markets supports revenue, but Asia-Pacific needs attention.
📦 Profitability & Margin Metrics
- EBITDA Margin: 17.2% (up from 15.7% YoY)
- PAT Margin: 11.6% (up from 9.4%)
- Effective Tax Rate: Reduced to 18.9%
A notable jump in margins was supported by:
✅ Favorable tax provisions
✅ One-time settlement reversals from past acquisitions
✅ Cost control despite ERP system transformation expenses
💥 Takeaway: Hexaware is improving its cost structure while expanding revenue — a solid sign of efficiency.
🏗️ Strategic Shifts: Betting on AI and Global Delivery Expansion
Hexaware is investing for the long haul.
Recent Moves:
- ✅ Acquired a specialist firm in global capability center (GCC) development to strengthen client delivery footprint
- ✅ Rolled out modern AI-assisted engineering tools and automation platforms
- ✅ Strengthened presence in key high-margin geographies including the Middle East and India
🤖 Industry Edge: With automation and cloud capabilities integrated, Hexaware is positioning itself as a digital transformation partner for global enterprises.
👥 People & Operational Metrics
| Metric | Q2CY25 |
|---|---|
| Total Employees | 32,410 |
| Utilization Rate (IT) | 83.7% |
| Voluntary Attrition | 11.1% |
| Cash & Bank Balances | ₹19,248 Mn |
🧩 Stability Indicator: Strong workforce utilization and cash reserves provide flexibility for continued innovation and M&A.
📉 Watchouts for Investors
- 🚨 Asia-Pacific revenue slide of -8.3% YoY
- 🚨 Weakness in consumer-linked sectors
- 🚨 Global decision-making cycles are slowing, especially for large tech contracts
⚠️ While the business model is strong, short-term volatility in macro trends could dampen momentum.
📊 Is the Stock Still Undervalued?
Considering Hexaware’s:
- Consistent earnings expansion
- Operating margin improvement
- Digital-first execution model
…it appears the market may not be pricing in its full potential yet — especially post-relisting earlier this year.
💰 Analyst View: If valuation multiples are still below IT mid-cap peers, the stock could be an attractive opportunity for long-term investors.
📝 Final Thoughts: Buy, Hold, or Watch?
✅ Buy if you believe in Hexaware’s long-term AI-led transformation
⚖️ Hold if you already hold mid-cap IT exposure and want to wait for clarity on APAC
🧠 Accumulate during corrections if you believe in fundamentals and execution strength
📌 Conclusion: Hexaware’s Quiet Comeback Is Gaining Steam
Hexaware is executing with precision — and doing it quietly. As competitors scramble to rebrand themselves as AI leaders, Hexaware is already integrating it into real client projects.
📣 Before the street catches on — this could be your moment to add a future-ready digital player to your portfolio.
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