Hexaware Technologies IPO Analysis – GMP, Strengths & Risk Factors

Hexaware Technologies Ltd (HTL) launched its initial public offering (IPO) on February 12, 2025, with bidding set to close on February 14, 2025. This issue is a pure Offer for Sale (OFS), which means the company will not receive any proceeds from the issue. All funds raised will go directly to the selling shareholders.

Hence, investors should get a clear understanding of both potential rewards and risks before subscribing. This IPO analysis provides a comprehensive review to help make an informed decision.

Hexaware Technologies IPO Details

Issue Details: Mainstream
Issue Size: Rs 8,750 crore
Price Band: Rs 674 – Rs 708
Lot size: 21 shares
Listing Date: February 19, 2025

Overview of Hexaware Technologies Ltd

HTL is a global leader in digital and technology services, with artificial intelligence (AI) at its core. Its portfolio includes advanced platforms and tools designed to help clients adapt, innovate, and optimize in the AI-first era.

HTL operates through six key industry-focused segments: financial services, healthcare and insurance, manufacturing and consumer, hi-tech and professional services, banking, and travel and transportation. It delivers its services through proprietary platforms, including RapidX™ for digital transformation, Tensai® for AI-powered automation, and Amaze® for cloud adoption.

HT was first listed on June 14, 2002, but was later delisted in 2020 by its previous promoter, Baring Private Equity Asia (now EQT). In 2021, Carlyle, through CA Magnum Holdings, acquired HTL for approximately $3 billion.

Hexaware Technologies Key Strengths

Impressive Financial Growth: HTL has delivered solid financial performance, with a CAGR of 14% in operational revenue, 15% in EBITDA, and 15% in net profit from CY21 to CY23.
Diverse, Long-Standing Clientele: HTL serves 31 Fortune 500 organizations and maintains long-term relationships, with its top 5, 10, and 20 customers averaging 15, 15, and 12 years of engagement, respectively, as of CY23.
Focus on High-Value Enterprises: HTL prioritizes large enterprises with substantial IT budgets. In CY23, 62% of its revenue came from customers with over $5 billion in revenue, while nearly 83% was from those exceeding $1 billion.
Extensive Global Footprint: As of September 30, 2024, HTL operates 39 delivery centres and 16 offices across the Americas, Europe, and APAC, with a workforce of 32,536 professionals across 28 countries, ensuring strong market reach.
De-Risked Business Model: HTL maintains a balanced revenue mix across regions, delivery models, and industries, reducing dependency on any single segment. The firm generates over $200 million in revenue across four key verticals—Financial Services, Healthcare & Insurance, Manufacturing & Consumer, and Hi-Tech & Professional Services—ensuring resilience across economic cycles.
Margin Expansion Potential: HTL has the highest onshore revenue mix among peers but also significant room to increase offshore operations. With an offshore share of 43.6%, this presents a strong lever for margin expansion.

Hexaware Technologies Risk Factors

Client Concentration Risk: While improving, client concentration remains a factor, with the top five clients contributing 25% of total revenue as of CY23, down from 29.5% in CY21. A loss of key clients could impact revenue stability.
Geographic Concentration: HTL derives a majority of its revenue from the Americas (73.4% in 9MCY24, 71.5% in CY23) and Europe (20.5% and 22.1% in the same periods, respectively). Economic downturns in these regions could adversely impact business performance.
Foreign Exchange Volatility: A significant portion of HTL’s transactions occur in multiple foreign currencies, including the US Dollar, British Pound, Euro, and Mexican Peso. Exchange rate fluctuations could materially affect profitability and margins.
High Attrition Rates: Employee attrition remains a challenge, with 14.7% in CY23, 23.2% in CY22, and 22.1% in CY21. Maintaining workforce stability is crucial for sustaining business growth.

Conclusion: Should You Subscribe to Hexaware Technologies IPO?

HTL is a global digital and technology services company with AI at its core. The IPO comes at a time of AI-driven disruptions in technology, presenting strong growth prospects. However, volatility in secondary markets and uncertainties in global macroeconomic conditions, including policy shifts in the U.S., should not be overlooked.

The global enterprise technology services market is projected to reach ~$4,107.5 billion by CY29, while the outsourced Gen AI services market is expected to grow at a CAGR of 60-62%, reaching $93.4-95.8 billion between CY24-29E.

In terms of valuation, the IPO is fairly priced at a P/E ratio of 43x based on CY23 earnings. HTL’s solid financials, reasonable valuations, and strong growth outlook make it a good investment opportunity for medium-to-long term investors.

However, risks such as deterioration in global growth or technology spending—especially due to trade tensions or U.S. policy shifts—could impact sector performance. This may present better buying opportunities in the secondary market post-listing.

Given these factors, the IPO is best suited for long-term investors who are not seeking immediate listing gains and are prepared to navigate short-term volatility.

For a deep dive into other IPOs, explore: IPO Corner on Liquide