Hexaware Technologies Limited, renowned for integrating artificial intelligence (AI) across its digital and technology services, officially launched its initial public offering (IPO) on February 12, 2025. This marks the company's significant return to the market following its delisting from the exchanges back in 2020. The IPO aims to raise about ₹8,750 crore through an offer-for-sale (OFS), with the price band set between ₹674 and ₹708 per share.
The bidding window for this offering is open until February 14, 2025, with shares expected to be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on February 19, 2025. Investors can apply for the IPO with a minimum lot size of 21 shares, needing to make at least ₹14,154 as their initial investment. The allotment process for this IPO is likely to conclude by February 17, 2025, followed by refunds initiated the next day.
On the first day of the offering, as of 10:14 AM, the subscription rate stood at 0.52 times, according to BSE data. Retail investors led the pack, demonstrating solid interest with a subscription rate of 0.55 times. Qualified Institutional Buyers (QIB) showed less enthusiasm, subscribing only 0.33 times, whereas Non-Institutional Investors (NII) reached 0.67 times subscription. This suggests varied levels of interest across different investor demographics.
Hexaware Technologies, headquartered in Navi Mumbai and founded in 1992, operates with a global reach, employing approximately 32,000 professionals across 54 offices around the world. The company provides IT services, business process outsourcing, and consulting services to various industries, including financial services, healthcare, and transport. Their expertise has positioned Hexaware as one of India's leading IT service providers.
Notably, the IPO has been labeled as the largest public offering by an Indian IT services company, outpacing the previous record held by Tata Consultancy Services (TCS), which raised ₹4,713 crore back in 2004. This anticipated IPO has become the focus of market experts and financial analysts who are weighing its potential performance against other sector competitors.
The gray market premium (GMP) for Hexaware Technologies has offered mixed signals to potential investors. Before the IPO, the unlisted shares were trading at about ₹711.5, just 0.49% above the upper price of the IPO, which, market analysts argue, may translate to subdued returns for investors post-listing.
Despite the muted enthusiasm shown during the first hours of the bidding process—where bids totaled only about 0.01 times the offer—several brokerage houses have voiced positive ratings for the IPO. Anand Rathi Research, for example, suggested this opportunity, stating, "Hexaware Technologies’ business has evolved over the last decade, with a growing set of offerings and larger and diversified customer base," indicating confidence in the company’s growth potential.
Another firm, Arihant Capital, has echoed similar sentiments, recommending the IPO for long-term investors. Their analysts noted, "The valuation at the upper band is at P/E of 43.1x, based on September 2024 earnings. This signifies the company’s strength amid fierce competition and economic pressures." They highlighted Hexaware's modernization efforts and innovative integration of AI as factors supporting their positive outlook.
Regarded as one of the foremost players within the mid-tier IT sector, Hexaware faces stiff competition, especially from larger global firms and other mid-sized competitors. With increasing industry consolidation, competition is expected to intensify as larger firms bundle their services, exerting pricing pressures on competitors like Hexaware.
Responding to concerns, analysts pointed to the economic fluctuations impacting client IT budgets, especially within the Americas and Europe, highlighting it as another obstacle for Hexaware's growth. Currency exchange variations also present challenges, as this firm operates across markets using various currencies.
The three-day subscription window is part of Hexaware Technologies’ broader strategy to both raise capital and increase its visibility on public markets. The company aims to hold onto its legacy of providing comprehensive services and solutions across multiple sectors, including financial services, healthcare and insurance, and travel and transportation.
Looking at the allocation, half of the issue is reserved for Qualified Institutional Buyers (QIB), 35% is set aside for retail investors, and the remaining 15% for Non-Institutional Investors (NII). A discount of ₹67 per share is being provided for eligible employees participating within the employee reservation category.
All eyes will be on the die-hard investors who believe the long-term growth of Hexaware could yield favorable outcomes as the company gears up for potential listing. Analysts remain cautiously optimistic, awaiting final decisions and final bids from investors as the subscription deadline looms. With major investment firms participating as anchor investors, the anticipation surrounding Hexaware Technologies is palpable as they seek not just to reclaim their position on the trading floors but also to carve out new paths amid the ever-changing digital and technological landscapes.