Hexaware Technologies, which is set to launch its initial public offering (IPO) on Wednesday has been able to garner positive reviews from the analysts tracking the issue but the company is losing its ground in the grey market before the primary offering kicks-off for bidding.
The anchor book for the Rs 8,750 crore IPO of Hexaware Technologies shall be announced later today. The issue is entirely an offer-for-sale (OFS) of up to 12,35,87,570 equity shares by its promoter CA Magnum Holdings and the company will not receive any proceeds from the IPO.
Hexaware Technologies is ranked in top 10 IT sector companies in India. Leveraging a strong global presence and networks in key markets in India, US and UK, the company continues to innovate in AI technologies, said Arihant Capital Markets in its IPO note.
"The company’s revenue has increased, with a focus on maintaining profitability through efficient execution and cost management. The issue is valued at a P/E ratio of 37.82 times at the upper end of the price band. We are recommending a 'subscribe for long term' for this issue," it said.
The IPO of Hexaware Technologies shall open for subscription for the investors on Wednesday, February 12 and the bidding shall conclude on Thursday, February 14. The IT solutions provider shall be offering its shares in the range of Rs 675-708 apiece and the issue can be applied for a minimum of 21 equity shares and its multiples thereafter.
Ahead of the IPO, Hexaware Technologies is commanding a mild grey market premium (GMP) of Rs 5 per share, suggesting a flat listing gains for the investors. The stock stood at Rs 19-20 at its peak when price band for the issue was announced.
Hexaware Technologies' expertise is complemented by a mix of strategic and industry-focused partners, such as ServiceNow, offers AI-powered solutions for various business functions such as human resources, IT, customer service, security and finance, and Backbase, a banking financial technology company in the Netherlands, said Anand Rathi Research in its IPO note.
"At the upper price band, the company is valuing at P/E of 43.1 times with a market cap of Rs 43,024.7 crore post issue of equity shares and return on net worth of 22.8 per cent. On the valuation front, we believe that the company is fairly priced. Thus, we recommend a 'subscribe' rating to the IPO" it said.
Incorporated in 1992, Navi Mumbai-based Hexaware Technologies is engaged in the business of global digital and technology services with artificial intelligence (AI). Kotak Mahindra, Citigroup Global Markets, JP Morgan India, HSBC Securities and IIFL Securities are the book running lead managers of the Hexaware Technologies IPO, while Kfin Technologies is the registrar.
Hexaware Technologies' valuations are relatively cheaper than its peers, said SBI Securities. "It has a diversified revenue mix in terms of industries, said . It leverages AI to build solutions for its clients driving improvement in productivity and gains in utilization. It has a healthy cash balance of Rs 1,346 crore as of September 2024," it added with a 'subscribe for long term' rating.
The company will finalise the basis of allotment on Monday, February 17 and the stock shall be listed at the bourses on Wednesday, February 19 on both BSE and NSE. Hexaware Technologies has reserved shares worth Rs 90 crore for its eligible employees, who will get a discount of Rs 67 per share in the IPO.
It has reserved 50 per cent of the shares for qualified institutional bidders (QIBs), while non institutional investors (NIIs) will have 15 per cent for the allocations. Retail investors shall get 35 per cent of the reservation in the issue. For the six months ended on September 30, 2024, Hexaware Technologies clocked net profit of Rs 853.3 crore with a revenue of Rs 8,594.2 crore.