Hexaware Technologies’ stock debut saw a muted start but analysts suggest a long-term view, citing attractive valuations and growth potential in AI-driven solutions.
Hexaware Technologies made its debut on the stock market with a muted response. On Wednesday, the shares were listed at Rs 745.50 on the National Stock Exchange (NSE), which was a 5.30% discount compared to the issue price of Rs 708 per share. Similarly, on the Bombay Stock Exchange (BSE), the stock began its trading session at Rs 731, a 3.25% discount from the issue price.
Initial Market Performance
The market debut of Hexaware Technologies was largely anticipated. Before the listing, the grey market premium (GMP) for Hexaware Technologies had disappeared, indicating a lack of premium in the unofficial market. This was due to subdued bidding for the IPO and overall jittery market sentiments.
Hexaware Technologies, based in Navi Mumbai, offered its shares at a price range of Rs 674-708 per share. Investors could apply for a minimum of 21 shares. The IPO aimed to raise Rs 8,750 crore through an offer-for-sale (OFS) of up to 12,35,87,570 equity shares by promoters and existing shareholders.
Subscription Details
The IPO was subscribed 2.66 times overall, with significant interest from qualified institutional bidders (QIBs), whose portion was subscribed 9.09 times. However, the non-institutional investors (NIIs) portion was only subscribed 20%, while the retail investors and employees portions were subscribed 11% and 32%, respectively.
Company Overview
Incorporated in 1992, Hexaware Technologies is involved in providing global digital and technology services with a focus on artificial intelligence (AI). The company leverages technology to deliver innovative solutions, integrating AI to help customers adapt, innovate, and improve in the AI-driven landscape.
Brokerage Views
Most brokerage firms held a positive outlook on the issue for the long term. Key book running lead managers for the Hexaware Technologies IPO included Kotak Mahindra Capital, JP Morgan India, HSBC Securities & Capital Markets, Citigroup Global Markets India, and IIFL Securities. Kfin Technologies served as the registrar for the issue.
Post-Listing Performance
Following its debut, shares of Hexaware Technologies increased by 4.6% to Rs 764.7 on the BSE. Brokerage JM Financial initiated coverage on the stock with a “buy” rating and a target price of Rs 820, suggesting a potential upside of 7% from the current levels.
JM Financial ascribed a price-to-earnings ratio (PER) of 30x for a 16% EPS compound annual growth rate (CAGR), implying a price/earnings to growth (PEG) ratio of 1.8x. The brokerage noted that this valuation is at a premium to the midcap basket’s average PER but at a discount to Coforge’s valuation, making it reasonable. They also pointed out that the promoter’s likely stake sale could be an overhang, but growth acceleration might narrow the valuation gap.
IPO Details and Carlyle Group
The Rs 8,750 crore IPO was backed by U.S. private equity giant Carlyle Group. The IPO saw strong demand from QIBs, who oversubscribed their portion by 9.09 times. However, the interest from NIIs and retail investors was relatively weaker, with subscription rates of 20% and 11%, respectively.
Hexaware’s IPO was entirely an offer for sale (OFS), meaning all proceeds went to Carlyle, reducing its stake from 95% to 74.1% post-listing. The market capitalization of Hexaware on the BSE is currently at Rs 46,014.64 crore. This listing marks the IT services sector’s largest IPO in India, surpassing Tata Consultancy Services’ Rs 4,713 crore issue in 2004.
Analysts’ Perspectives
SBI Securities highlighted that Hexaware’s AI-driven digital solutions position it favorably against its peers. The company reported a strong cash balance of Rs 1,346 crore as of September 2024.
The IT services firm, which was delisted in 2020 at Rs 475 per share, operates across six industry verticals, including financial services, healthcare, and manufacturing. Analysts anticipate that its focus on AI-led transformation will drive future growth.
Listing on NSE and BSE
Hexaware Technologies shares were listed on both the NSE and BSE on February 19. The shares of Hexaware Technologies Ltd were listed at Rs 745.5 per share on the NSE, a 5.3% premium over its issue price. On the BSE, the shares were listed at Rs 731 apiece, a 3.25% premium. Following the listing, the company’s total market valuation stood at Rs 44,422.48 crore.
IPO Subscription Details
The Rs 8,750 crore Hexaware Technologies IPO, which was open for subscription between February 12-14, was subscribed 2.66 times. The issue had a price band of Rs 674 – 708 per share. The company had raised Rs 2,598 crore from anchor investors.
Historical Context
Hexaware’s public issue is the largest in India’s IT services sector since Tata Consultancy Services’ Rs 4,700 crore IPO over two decades ago. At the upper price band of Rs 708 per share, the company is valued at over Rs 43,000 crore.
Analysts’ Recommendations
Analysts advise investors to consider a long-term view, given the company’s attractive valuations and growth potential.
Abhishek Pandya, Research Analyst at StoxBox, noted that the issue is priced at a price-to-earnings (P/E) ratio of 43.1x based on CY23 earnings, which is relatively lower than its listed peers. He suggested that investors who received an allotment may consider holding their shares for medium to long-term gains.
Sources: https://www.businesstoday.in/markets/company-stock/story/hexaware-technologies-shares-list-on-a-muted-note-stock-debuts-at-5-premium-465126-2025-02-19
https://m.economictimes.com/markets/stocks/news/hexaware-shares-rise-5-after-listing-jm-financial-initiates-coverage-with-rs-820-target-price/articleshow/118377756.cms
https://www.moneycontrol.com/news/business/ipo/hexaware-technologies-shares-list-at-5-premium-over-ipo-price-on-nse-12944702.html