The initial public offering (IPO) of Hexaware Technologies Limited opened on February 12, 2025, and is set to close on February 14, 2025. Targeting a total issue size of ₹8,750 crores, this IPO consists solely of an offer for sale (OFS) from the promoter, CA Magnum Holdings.
Initially launched at a price band ranging from ₹674 to ₹708 per share, the shares will require investors to apply with a minimum lot size of 21 shares, amounting to at least ₹14,154. Shares are expected to be listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on February 19, 2025.
Despite the optimistic expectations surrounding this IPO, the response from investors has been tepid. On its first day of subscription, Hexaware Technologies’ IPO saw subscription rates stagger at just 0.04 times, according to data from the BSE. This means only 3,642,080 shares out of the total 91,423,354 on offer had been bid for by the close of Day 1.
By Day 2, as of 10:39 AM on February 13, 2025, the overall subscription remained at 0.04 times. Qualified Institutional Buyers (QIBs) showed the same subscription rate of 4% for their reserved shares, Non-Institutional Investors (NIIs) achieved only 2%, and Retail Individual Investors (RIIs) slightly surpassed them at 5%. The employee category managed to achieve 0.12 times subscription, indicating varying levels of interest among different investor types.
Chosen as book-running lead managers for this major offering are notable financial institutions such as Kotak Mahindra Capital Company, Citigroup Global Markets, JP Morgan India, HSBC Securities, and IIFL Securities. It is also important to note this is the largest IPO witnessed by India’s IT services sector since Tata Consultancy Services’ offering over two decades ago, as reported by several financial news outlets.
The potential for the IPO to raise such significant capital was heightened by the fact it was entirely based on the OFS by the promoters. This arrangement means Hexaware Technologies will not gain any actual proceeds from the offering; instead, all funds raised will go directly to CA Magnum Holdings after deducting expenses and taxes associated with the sale.
Market observers have noted the low grey market premium (GMP) of Hexaware’s shares, touching merely ₹3 by mid-morning on February 13, which suggests minimal confidence among investors for such bidding. The flat trading of unlisted shares at around ₹711 points to subdued market expectations, reflecting only 0.42% above the upper price band.
Brokerage firms have varied opinions surrounding the valuation of Hexaware Technologies, yet most recommend subscribing to the IPO, viewing its AI-driven model favorably. Analysts point out the company has exhibited consistent growth, securing its place as one of the leaders within the global IT service industry. Notably, Choice Broking remarked, "At the upper end of its price range, Hexaware Technologies is demanding a price to earnings (PE) multiple of 41.1 times, based on its CY23 EPS of ₹17.2," adding, "The company has marked steady growth in its top and bottom lines for the periods." They conclude with encouragement for long-term investors to 'subscribe for growth.'
While investor interest has been limited, experts continue to highlight the future potential for Hexaware Technologies, especially with its deep integration of AI across its offerings. This IPO grants the firm public visibility and the opportunity to reposition itself within India’s competitive IT service sector, which remains fiercely contested.
Hexaware Technologies, established back in 1992 and headquartered in Navi Mumbai, has been making strides to innovate its service offerings. The firm specializes across various sectors such as banking, healthcare, and manufacturing, thereby representing its multifaceted capabilities collectively catering to diverse client needs beyond the traditional IT service scope.
Looking forward, the overall sentiment surrounding Hexaware Technologies’ IPO reflects both cautious optimism and scrutiny as it prepares to enter the public market. The company's debut could significantly alter its footprint, enhancing accessibility for investors and providing the necessary liquidity for its existing shareholders.