Hexaware Technologies Sees Shift in Market Assessment Amid Technical and Financial Developments

Technical Trends Signal Emerging Positive Momentum

Recent market analysis of Hexaware Technologies reveals a transition in technical indicators from a cautiously negative stance to a more optimistic outlook. Weekly charts show the Moving Average Convergence Divergence (MACD) indicator in a bullish phase, while monthly MACD remains mildly bearish, suggesting a nuanced but improving momentum. The Bollinger Bands on both weekly and monthly timeframes indicate a bullish trend, reflecting increased price volatility within an upward channel.

Other technical measures present a mixed but generally positive picture. The weekly Dow Theory signals a mildly bullish trend, supported by the On-Balance Volume (OBV) indicator showing mild bullishness on a weekly basis, though monthly OBV lacks a clear trend. The Relative Strength Index (RSI) remains neutral on both weekly and monthly scales, indicating no immediate overbought or oversold conditions. Daily moving averages, however, still show a mildly bearish tendency, suggesting some short-term caution among traders.

Price action supports this technical shift, with Hexaware Technologies’ stock price rising to ₹795.65 from a previous close of ₹757.80, reaching an intraday high of ₹808.40. The stock remains below its 52-week high of ₹900.15 but comfortably above the 52-week low of ₹592.95, reflecting resilience amid market fluctuations.

Financial Performance Reflects Strength in Recent Quarters

Hexaware Technologies’ financial results for the second quarter of fiscal year 2025-26 underscore a period of positive performance. Net sales for the quarter reached ₹3,483.60 crores, marking the highest quarterly figure recorded by the company. Operating profit before depreciation, interest, and taxes (PBDIT) also peaked at ₹601.30 crores, while the operating profit margin relative to net sales stood at 17.26%, the highest in recent quarters.

The company’s balance sheet remains notably conservative, with an average debt-to-equity ratio of zero, indicating an absence of debt financing. This financial prudence supports Hexaware’s operational stability and reduces risk exposure in volatile market conditions. Additionally, the company has reported positive results for three consecutive quarters, signalling sustained operational momentum.

Valuation Metrics Present a Mixed Picture

Despite the encouraging financial and technical signals, valuation metrics suggest a degree of premium pricing. Hexaware Technologies’ price-to-book value stands at 8.4, which may be considered elevated relative to typical industry benchmarks. This valuation reflects market expectations of continued growth but also implies a higher cost for investors seeking exposure to the stock.

Return on equity (ROE) is recorded at 20.3%, indicating effective utilisation of shareholder funds to generate profits. However, the stock’s price performance over the past year has been flat, with a 0.00% return, even as profits have increased by 18%. This divergence between earnings growth and share price movement may reflect broader market dynamics or investor caution.

Quality Assessment and Shareholder Structure

Hexaware Technologies is characterised by a strong promoter presence, with majority shareholders being promoters. This concentrated ownership can provide strategic stability and alignment of interests between management and shareholders. The company’s quality parameters are supported by consistent profitability and a clean balance sheet, factors that contribute to its standing within the Computers - Software & Consulting sector.

Longer-term returns for Hexaware Technologies show a positive trajectory, with a 5-year return of 69.02% and a 10-year return of 214.11%. These figures, while trailing the Sensex’s 5-year and 10-year returns of 89.14% and 232.57% respectively, demonstrate the company’s capacity for wealth creation over extended periods.

Comparative Market Returns and Sector Context

Examining Hexaware Technologies’ recent returns relative to the broader market reveals a stronger performance over shorter timeframes. The stock recorded a 6.78% return over the past week, contrasting with the Sensex’s decline of 0.53% during the same period. Over the last month, Hexaware’s return was 14.47%, significantly outpacing the Sensex’s 2.16% gain.

Year-to-date and longer-term returns for the stock are not available for direct comparison, but the Sensex’s 9.12% year-to-date and 5.32% one-year returns provide a benchmark for market performance. Over three years, the Sensex has returned 35.62%, while over five and ten years, returns stand at 89.14% and 232.57% respectively, indicating the broader market’s sustained growth trajectory.

Within the Computers - Software & Consulting sector, Hexaware Technologies’ recent technical and financial developments position it as a noteworthy player, especially given its recent price movements and operational results.

Risks and Considerations

While the company’s financial health and technical indicators show encouraging signs, certain risks remain. The elevated price-to-book ratio suggests that the stock may be priced for growth, which could expose investors to valuation risk if growth expectations are not met. Additionally, the flat share price over the past year despite profit growth may indicate market scepticism or external factors influencing investor sentiment.

Investors should also consider the mildly bearish signals from some daily technical indicators and the mixed readings from monthly technical tools. These nuances highlight the importance of monitoring Hexaware Technologies’ performance in the context of broader market conditions and sector trends.

Outlook

The recent revision in Hexaware Technologies’ market assessment reflects a combination of improving technical trends, solid financial results, and a valuation profile that suggests investor confidence tempered by caution. The company’s strong quarterly sales and profit figures, coupled with a debt-free balance sheet, underpin its operational strength. Meanwhile, the evolving technical landscape points to a potential shift in market sentiment.

As the stock continues to navigate its 52-week price range, market participants will likely weigh these factors alongside sector developments and macroeconomic conditions. The company’s ability to sustain growth momentum and translate profitability into share price appreciation will be key to its future market trajectory.

Summary

Hexaware Technologies’ recent changes in evaluation metrics highlight a complex but generally positive picture. Technical indicators suggest emerging bullishness, financial results demonstrate operational strength, valuation metrics indicate a premium stance, and quality factors remain robust. This multifaceted assessment provides investors with a comprehensive view of the company’s current position within the Computers - Software & Consulting sector.

Get 1 year of Weekly Picks FREE when you subscribe to MojoOne. Offer ends soon. Start Saving Now →