Hexaware Technologies- Play the revenue momentum: Emkay

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Hexaware Technologies

Play the revenue momentum

ACCUMULATE

CMP: Rs55                                        Target Price: Rs66

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n     We initiate coverage on Hexaware with an ACCUMULATE rating and TP of Rs 66 as revenue momentum drives strong financial performance over FY11-13E

n     FY12 revenue guidance of US$ 290 mn (+25% YoY) is conservative (albeit for a macro deterioration). We expect 30% + revenue growth in FY12.

n     Estimate a 24%, 52% and 50% revenue, EBITDA and profit CAGR (25% US$ revenue CAGR) over FY11-13E, driven by operating leverage (last 2 quarters have shown early signs of margin recovery)

n     Chequered past – a dampener. Despite a 20% outperformance in last 3 months, valuations remain attractive at ~9.7x/8.3x FY12/13E EPS as pick up in fin performance sustains