Hexaware Technologies Upgraded to Buy on Improved Technicals and Attractive Valuation

Technical Trends Shift to Mildly Bullish

The primary catalyst for the upgrade was a positive change in Hexaware’s technical grade, which moved from a sideways trend to a mildly bullish stance as of 2 July 2026. Weekly technical indicators such as the Moving Average Convergence Divergence (MACD) and the KST oscillator have turned mildly bullish, signalling a potential upward momentum in the near term. The weekly On-Balance Volume (OBV) also supports this positive outlook, showing bullish accumulation.

However, monthly technicals present a more nuanced picture. While the MACD and KST remain mildly bearish on a monthly scale, the Relative Strength Index (RSI) on the monthly chart is bullish, suggesting underlying strength despite some short-term volatility. Bollinger Bands indicate weekly bullishness but mildly bearish conditions monthly, reflecting a stock in transition rather than a decisive breakout.

Daily moving averages remain mildly bearish, indicating some caution in the short term. Overall, the technical signals suggest that Hexaware is emerging from a consolidation phase, with a cautious but optimistic outlook for price appreciation.

Valuation Improves to Attractive from Fair

Hexaware’s valuation grade was upgraded from fair to attractive, reflecting its compelling price metrics relative to peers in the IT software and consulting sector. The company’s price-to-earnings (PE) ratio stands at 22.7, which is notably lower than competitors such as Oracle Financial Services (PE 36.13) and Persistent Systems (PE 37.36). This valuation discount offers investors a more favourable entry point.

Other valuation multiples reinforce this positive assessment. The enterprise value to EBITDA (EV/EBITDA) ratio is 16.68, and the price-to-book value is 5.37, both indicating reasonable pricing given Hexaware’s return on equity (ROE) of 23.25% and return on capital employed (ROCE) of 30.92%. The company also offers a dividend yield of 2.56%, adding to its appeal for income-focused investors.

Compared to peers, Hexaware’s valuation is attractive, especially when considering its net-debt-free status and strong profitability metrics. This valuation upgrade signals that the stock is now viewed as undervalued relative to its earnings potential and growth prospects.

Financial Trend: Stable but Flat Quarterly Performance

Hexaware’s financial trend remains steady, though the latest quarter (Q4 FY25-26) showed flat performance. Despite this, the company’s long-term fundamentals remain robust. Net sales have grown at an annualised rate of 27.8%, while operating profit has expanded by 21.23% annually, underscoring consistent operational efficiency and growth.

Profitability metrics are strong, with an average ROE of 21.61% over the long term, and the company is net-debt free, which reduces financial risk and enhances balance sheet strength. Notably, profits have risen by 24% over the past year, even as the stock price declined by 36.59%, suggesting a disconnect between market sentiment and underlying business performance.

However, investors should be mindful of risks such as the flat quarterly results and the fact that 100% of promoter shares are pledged, which could exert downward pressure on the stock in volatile markets. Additionally, Hexaware has underperformed the broader market indices over the last year, with the BSE500 index falling only 1.52% compared to Hexaware’s 36.59% decline.

Quality Assessment: Strong Fundamentals Amid Market Challenges

Hexaware’s quality grade remains strong, supported by its mid-cap market capitalisation and solid operational metrics. The company’s consistent return ratios and net-debt-free status highlight its financial discipline and resilience. While the stock has experienced significant price volatility, the underlying business fundamentals remain intact, favouring a positive long-term outlook.

The company’s 52-week price range of ₹400.35 to ₹900.15 reflects considerable market fluctuations, but recent price action around ₹555 suggests a stabilisation phase. The stock’s one-week return of 12.2% significantly outperformed the Sensex’s 0.52% gain, indicating renewed investor interest and potential for further upside.

Market Performance and Peer Comparison

Hexaware’s performance relative to the Sensex and sector peers provides additional context for the rating upgrade. While the stock has lagged the Sensex over the year-to-date and one-year periods, it has delivered a 17.88% return over five years and an impressive 142.21% over ten years, underscoring its long-term growth credentials.

Compared to other IT software companies, Hexaware’s valuation is more attractive, and its profitability metrics are competitive. For instance, Oracle Financial Services and Persistent Systems trade at significantly higher PE ratios and EV/EBITDA multiples, making Hexaware a more compelling value proposition for investors seeking exposure to the sector.

Conclusion: A Buy Rating Reflecting Balanced Optimism

The upgrade of Hexaware Technologies Ltd from Hold to Buy by MarketsMOJO reflects a balanced assessment of the company’s technical, valuation, financial, and quality parameters. The mildly bullish technical indicators suggest improving market sentiment, while the attractive valuation metrics provide a compelling entry point relative to peers.

Despite flat recent quarterly results and risks related to promoter share pledging, Hexaware’s strong long-term fundamentals, net-debt-free status, and consistent profitability underpin the positive outlook. Investors looking for exposure to the IT software and consulting sector may find Hexaware’s current profile appealing, especially given its recent price correction and improving technical signals.

As always, investors should weigh these factors against broader market conditions and individual risk tolerance before making investment decisions.

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