Are Hexaware Technologies Ltd latest results good or bad?

Hexaware Technologies Ltd's latest financial results for Q3 FY26 reveal a complex operational landscape characterized by both revenue growth and significant challenges in profitability. The company reported net sales of ₹3,478.20 crores, reflecting a year-on-year growth of 10.27%, which indicates resilience in top-line performance despite a marginal quarter-on-quarter decline of 0.16%. However, this revenue growth was overshadowed by a notable contraction in profitability metrics. The net profit for the quarter stood at ₹291.90 crores, which represents a decline of 21.15% compared to the previous quarter and an 8.47% decrease year-on-year. This decline raises concerns about the sustainability of earnings, particularly given that operating profit, excluding other income, fell sharply to ₹377.90 crores, marking the lowest level in recent quarters. The operating margin, excluding other income, compressed significantly to 10.86%, down from 17.26% in the prior quarter, highlighting operational challenges and cost management issues. Additionally, the contribution of other income to profit before tax surged to an unsustainable 48.92%, suggesting potential weaknesses in core business operations. Employee costs also increased, consuming 58.66% of revenues, which may indicate rising wage pressures or utilization challenges. In light of these results, Hexaware Technologies experienced an adjustment in its evaluation, reflecting the operational pressures and margin compression observed in the latest quarter. The company maintains a strong return on equity of 23.29%, indicating efficient capital deployment, but the recent performance raises questions about the sustainability of this strength amid the current challenges. Overall, while Hexaware Technologies demonstrates solid revenue growth, the significant margin compression and deteriorating earnings quality warrant close monitoring in the upcoming quarters to assess the company's ability to stabilize and improve its operational performance.