The initial public offering (IPO) of Hexaware Technologies continued to attract a muted response from the investors during the second day of the bidding process from all the categories of the bidders. The issue, which kicked off on Wednesday, February 12, was overall subscribed only four per cent on day one.
Hexaware Technologies is selling its shares in the price band of Rs 674-708 apiece. Investors can apply for a minimum of 21 shares and its multiples thereafter. It is looking to raise Rs 8,750 crore via IPO, which is entirely an offer-for-sale (OFS) of up to 12,35,87,570 equity shares by the promoters and existing shareholders of the company.
According to the data, the investors made bids for 59,83,320 equity shares, or 0.07 per cent, compared to the 9,14,23,354 equity shares offered for the subscription by 12.10 pm on Thursday, February 13, 2025. The three-day bidding for the issue shall conclude on Friday, February 14.
The allocation for qualified institutional bidders (QIBs) was subscribed 11 per cent, while the portion reserved for non-institutional investors (NIIs) saw a subscription of only 2 per cent. Portion allocated towards employees was booked 15 per cent. However, the quota set aside for retail investors saw bids for 5 per cent of their allocation.
Incorporated in 1992, Navi Mumbai-based Hexaware Technologies is engaged in the business of global digital and technology services with artificial intelligence. The company uses technology to offer innovative solutions, integrating AI to help customers adapt, innovate, and improve in the AI-driven world.
The grey market premium (GMP) of Hexaware Technologies has seen a sharp correction on the back of dull bidding for the issue and dented market sentiments. Last heard, the company was commanding a premium of merely Rs 3 per share in the unofficial market, suggesting a flat listing for investor investors. The GMP stood around Rs 20 before the issue kicked off.
Brokerage firms are mostly positive on the issue but for a long-term perspective citing its strong financial, experienced management, cash flow status of the company, long standing relation with the existing customers and reasonable valuations. However, the complete OFS nature of the business, dependence of US and European clients and currency fluctuation are key concerns.
Hexaware Tech offers AI-enabled solutions across various industries from 39 global delivery centres with a team of 32,000 employees. Over a period of time, it has successfully created AI enabled platforms – ‘RapidX’ for digital transformation, ‘Tensai’ for AI-powered automation and ‘Amaze’ for cloud adoption, said Nirmal Bang Securities.
"Hexaware's business has undergone significant transformation over the last decade, driven by its adaptive business strategy. Over a period of time, It has expanded its offerings and customer base, broadened its global delivery footprint, increased focus on innovation and technology," it added with a 'subscribe for long term' rating.
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.
Hexaware is valued at P/E of 37.8 times on CY24E annualized EPS of Rs. 18.7. The issue has been priced at a discount of 23 per cent on the average CY24E/FY25E P/E to its peers. In CY23, the company clocked an impressive RoE of 21.5 per cent. It has grown its revenue, Ebit and PAT at a CAGR of 20.3 per cent, 19.5 per cent and 15.4 per cent over CY 21-23, said Indsec Research.
"We have a 'subscribe' rating on the company on account of AI-led digital capabilities & platforms such as RapidX, Tensai and Amaze; Hexaware’s deep domain expertise in all the verticals & service lines; long tenured relationship with top clients; expected increase in outsourcing of Tech services to benefit Hexaware; management’s plan to pursue acquisitions in order to enhance services and increase geographic reach," it said.
Kotak Mahindra Capital, Citigroup Global Markets India, JP Morgan India, HSBC Securities & Capital Markets and IIFL Securities are the book running lead managers of the Hexaware Technologies IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both NSE and NSE.