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Hexaware Tech slumps after muted Q2 outcome

25-Jul-25 16:12 Hrs IST

Consolidated revenue rose 1.6% QoQ to Rs 3260.70 crore in Q2CY25. In constant currency, revenue growth was 1.3% QoQ and 7.5% YoY.

Adjusted EBITDA rose 8.3% QoQ and 7.8% YoY to Rs 590.30 crore in Q2CY25. Adjusted EBITDA margin stood at 18.1% in Q2CY25 as against 16.6% in Q1CY25 and 15.7% in Q2CY24.

Extraordinary expenses surged to Rs 142 crore in Q2CY25 (from Rs 8.7 crore in Q1CY25), including: Rs 78.2 crore in customer-related provisions, Rs 12 crore for ERP transformation, Rs 12.8 crore in acquisition-related expenses and Rs 39.4 crore impairment tied to a legacy contract.

The company's closing cash balance as of 30 June 2025 stood at Rs 1924.8 crore.

Hexaware Technologies has flagged a continued softness in the macro environment for calendar year 2025, citing that the current slowdown is cyclical in nature and not driven by structural shifts like artificial intelligence disruption.

In its latest CY25 business outlook, the company noted that while all large consolidation deals remain in the works, decision-making delays are impacting the pace of small and mid-sized transactions. As a result, Hexaware has lowered its expectations for the remainder of the year. However, the company reassured that its overall deal pipeline remains strong, particularly in strategic initiatives, which are showing rapid growth.

On the vertical front, Financial Services (FS) and Travel & Transportation (T&T) are expected to lead growth, with the Banking segment likely to expand in line with the company's average. That said, Healthcare & Insurance (H&I) and Hi-Tech & Professional Services (HTPS) are projected to grow marginally below the company average, while Manufacturing & Consumer (M&C) continues to face significant weakness due to broader macroeconomic challenges.

Despite the subdued sentiment, Hexaware reaffirmed its EBITDA margin outlook for the year at 17.1% to 17.4%, even as ERP-related expenses continue to weigh on costs. The company also expects to outperform on EPS, benefiting from a lower effective tax rate (ETR), now projected at around 24.5%, down from the earlier guidance of 25%-26%.

Hexaware is a global digital and technology services company.

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