Hexaware Technologies (HEXT) Q4 2009 earnings summary

Executive summary

• FY2009 revenue fell 9.8% YoY to Rs. 10,385.62 million amid global recession, while operating profit before FX, other income and tax rose 88.5% to Rs. 1,687.64 million and PAT rose 127.5% to Rs. 1,341.78 million.

• Cost controls, improved utilization and facilities consolidation strengthened profitability; 2010 recovery signs, a formidable order book and continued offshoring demand supported the outlook.

• Strategy centered on focused verticals and service lines, IP-led solutions, broader client relationships and expansion into domestic India, Remote IMS and emerging sectors.

Financial highlights

• Consolidated operating revenue was Rs. 10,385.62 million vs. Rs. 11,519.14 million in 2008; other income rose to Rs. 374.77 million from Rs. 228.91 million.

• Consolidated PAT was Rs. 1,341.78 million vs. Rs. 589.83 million; PBT was Rs. 1,445.36 million vs. Rs. 744.87 million.

• EBIT before FX gain/loss increased 86.04% to Rs. 1,705.10 million; EBIT after FX gain/loss rose 102.56% to Rs. 1,088.05 million.

• Basic/diluted EPS was Rs. 9.34/Rs. 9.00 vs. Rs. 4.11/Rs. 4.07; fair-value-adjusted EPS was Rs. 9.14/Rs. 8.80.

• Software development, employment and administration expenses fell to Rs. 1,197.36 million, Rs. 5,710.74 million and Rs. 1,501.48 million, respectively.

Outlook and guidance

• 2010 priorities: maintain operational performance and pursue market recovery; BPO, QATS and enterprise solutions expected to stimulate growth, with new verticals and horizontals built on these platforms.

• Management cited a formidable order book and expected to expand client base, geographies, verticals and horizontal services; India domestic market investment and sales coverage were increased.

• Visible outsourcing trends pointed to greater offshoring as clients sought lower costs; plans included seeding manufacturing and developing healthcare and life sciences capabilities.