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12 February 2025

Hexaware Technologies Launches Record ₹8,750 Crore IPO

The IPO opens for subscription on February 12 and aims to bolster Hexaware’s market presence and liquidity.

The initial public offering (IPO) of Hexaware Technologies has officially kicked off, marking a significant moment for the Indian IT services sector. On February 12, 2025, this Navi Mumbai-based IT solutions provider initiated its bid process to raise Rs 8,750 crore through the growth of its public equity market presence.

Hexaware is offering shares within the price band of Rs 675 to 708 each, with the option for investors to apply for at least one lot comprising 21 shares. This IPO is entirely composed of offer-for-sale (OFS) shares from its principal promoter, Carlyle Group, indicating no proceeds will directly benefit Hexaware but instead facilitate liquidity for its selling shareholders.

Closing for bidding on February 14, the IPO is set to list on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) on February 19. Hexaware's rising market stature makes this the largest initial offering from any Indian IT services firm, surpassing the previous record held by TCS back in 2004.

Leading the IPO are seasoned institutions such as Citigroup Global Markets, Kotak Mahindra Capital, JP Morgan, and HSBC Securities, solidifying strong backing for this ambitious market entry. Ahead of this launch, Hexaware raised Rs 2,598 crore from 96 anchor investors, including prestigious names like Government of Singapore and Goldman Sachs, allocating shares at the upper price point of Rs 708.

With solid endorsements from financial experts and analysts, the IPO is receiving varied 'subscribe' recommendations. For example, Anand Rathi Research commented, "Hexaware Technologies' business has evolved over the last decade, with growing offerings and higher focuses on innovation." They assert the firm is well-valued and positioned for future growth.

Geojit Financial services echoed similar sentiments, remarking, "At the upper price band, Hexaware Technologies is valued at 43.1 times P/E, with good growth prospects." Their recommendation for long-term tuning aligns with the anticipated success of the offer.

The grey market premium (GMP), which provides insight prior to listing, experienced fluctuations but now indicates modest gains with the stock currently trading at Rs 3.5 premium over the issue price, signalling mild investor enthusiasm. Retail investors can expect this opportunity to yield potential returns, albeit at trending levels amid sectors' volatility.

Hexaware’s execution in this IPO is not merely about generating funds; it's also fundamentally about enhancing visibility on the public trading scene. This positioning could attract new clients, improve service offerings, and facilitate favorable partnerships across many sectors.

Financially, the company reported excellent numbers; with total income reaching Rs 10,389 crore and net profit hitting Rs 997.6 crore for the fiscal year ending March 31, 2024, Hexaware has demonstrated its operational efficiency. Their numbers for cash flows and profitability are indicative of strategic management and commitment to long-term sustainability.

Delivering its services primarily through offshore delivery centers across India and Sri Lanka, Hexaware aims to target expansion, with plans underway to establish new centers strategically positioned within Tier II cities. Such strategic initiatives promise to broaden the firm's reach and optimize delivery efficiency.

With nearly 50% of its revenue derived from the banking, financial services, and insurance (BFSI) sectors alongside healthcare, Hexaware has diversified its portfolio significantly. It stands competitively against key players like Persistent Systems and Coforge, also showing growth potential through its AI-enhanced offerings.

While the financial performance portrays a positive trend, analysts advise caution, noting the competitive nature of the IT services industry and recent growth metrics showing Hexaware trailing behind some peers. Yet, its positioning on significant international fronts should bolster its market presence and help retain high-value clients, especially with bolstered government support for outsourcing.

Conclusively, Hexaware Technologies' IPO is poised as not only the most substantial offering within Indian IT services but also as a transformative chapter for the firm, propelling it toward fruitful horizons and potentially establishing it as a long-term player to watch within the fast-evolving digital services marketplace.