Hexaware Tech. (HEXT)

FairStock Score: 70/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 2/2 · Growth: 1/2 · Dividend: 1/1

Key Financials

Strengths

• High ROE of 21.68% and ROCE of 30.00% reflect strong capital efficiency and a durable competitive moat.
• Low debt/equity of 0.11, Piotroski F-Score of 8/9, and Altman Z-Score of 3.97 indicate excellent financial health.
• Profit growth of 16.17% outpacing revenue growth of 8.44% shows operating leverage and margin discipline.
• Free cash flow of ₹825 Cr covers the 2.43% dividend and gives organic growth cushion.
• Promoter holding at 74.30% aligns majority interest with minority shareholders.

Concerns

• Price ₹463.45 is far above Graham Number ₹282.93 and DCF value ₹307.80, leaving no margin of safety (MoS -67.35%).
• PEG of 34.45 implies the current P/E is not justified by underlying growth.
• Sales growth of 8.44% is moderate; if it slips further, the 19.94 P/E could compress.
• Negative EV/EBITDA of -44.55 is an unexplained red flag that warrants investigation.

AI Analysis

At ₹463, Hexaware is a well-run IT services business, but Mr. Market is asking for a lot. The company earns 21.68% on equity and 30% on capital employed, and it carries almost no debt — debt/equity is just 0.11. The Piotroski score of 8/9 and Altman Z of 3.97 confirm a financially healthy firm. Free cash flow of ₹825 crore supports the 2.43% dividend, and promoters own 74.3%, so my interests are aligned with theirs. Yet valuation is the problem. The P/E of 19.94 and P/B of 4.48 are not unreasonable for the quality, but Graham would demand a margin of safety. Here the Graham Number is ₹282.93 and the DCF value is ₹307.80 — far below ₹463.45. That means negative margin of safety. The PEG of 34.45 also tells me the market has already priced in excellent growth. But what is that growth? Sales advanced only 8.44% last year and 13.35% over five years; profit rose 16.17%. This is steady, not spectacular. An EV/EBITDA of -44.55 is bizarre and, without more data, I would treat it as a red flag rather than ignore it. Hexaware is the kind of business I might own, but only at the right price. The stock has fallen from ₹829 to ₹463, yet it is still not cheap by my calculation. I need patience. A good company can be a bad investment if you overpay. For now, I keep it on my watchlist, not in my wallet.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer