Profits rebound at Hexaware

While headline revenues at Mumbai-based Hexaware inched forwards by less than 1% to $94.8m in Q2 (to 30th June) compared to the prior quarter, EBIT margins jumped by well over 4 points qoq to 22.0%, also nearly a point higher yoy. Hexaware chairman Atul Nishar expects profitability to remain “healthy”, and increased the dividend. Furthermore, he guided for faster growth this quarter – between 3.5-5.5% qoq – which is really quite a clip and belies Hexaware’s modest size compared to top tier peers.

This is perhaps even more surprising given that over 90% of Hexaware’s revenues derive from application-related services, a segment that has seen severe impact on discretionary spend. It seems that Hexaware is able to find the relatively few ‘sweet spots’ in this segment and is able to work them without having to sacrifice margin. That’s quite impressive.