Hexaware Technologies Falls 7.03%: 4 Key Factors Behind the Weekly Decline

16 February 2026: Downgrade to Sell and Valuation Shift

Hexaware Technologies began the week with a notable downgrade by MarketsMOJO from 'Hold' to 'Sell' on 15 February 2026, reflecting concerns over valuation, financial trends, and increased promoter share pledging. On 16 February, the stock opened at Rs.560.95, gaining 2.68% intraday, outperforming the Sensex's 0.70% rise to 36,787.89. Despite this positive start, the downgrade highlighted a shift in valuation grade from attractive to fair, driven by a price-to-earnings ratio of 23.34 and a price-to-book value of 5.43. These multiples, while moderate within the sector, indicated a premium compared to historical levels and peers.

Financially, Hexaware showed flat quarterly performance with a PBDIT of Rs.377.90 crore and an operating profit margin of 10.86%, signalling margin pressure. The downgrade also cited a 100% promoter share pledge, doubling over the last quarter, raising governance concerns. Despite strong return on capital employed (30.92%) and return on equity (23.25%), the stock’s flat return contrasted with the Sensex’s positive momentum year-to-date.

17 February 2026: Continued Gains Amid Mixed Sentiment

On 17 February, Hexaware’s share price rose further by 3.46% to Rs.595.95, outpacing the Sensex’s 0.32% gain to 36,904.38. This uptick followed the previous day’s downgrade news, suggesting some short-term buying interest or technical rebounds. However, the volume declined to 59,412 shares, indicating cautious participation. The valuation concerns and downgrade remained key factors influencing investor sentiment despite the intraday strength.

18 February 2026: Sharp Reversal and Price Decline

The stock reversed sharply on 18 February, falling 4.08% to close at Rs.571.65, despite the Sensex advancing 0.43% to 37,062.35. This decline was accompanied by increased volume of 106,937 shares, signalling stronger selling pressure. The drop reflected growing concerns over Hexaware’s valuation and financial stagnation, as well as the impact of the downgrade. The stock’s technical positioning began to deteriorate, foreshadowing further weakness in the coming sessions.

19 February 2026: Intraday Low Amid Market Sell-Off

On 19 February, Hexaware’s shares plunged 5.35% to Rs.541.05, hitting an intraday low of Rs.543.3. This decline was sharper than the Sensex’s 1.45% fall to 36,523.88, and the stock underperformed its sector by 4.67%. The broader market experienced a sharp reversal after a positive open, with the Sensex dropping 1,508.45 points during the session. Hexaware’s technical indicators worsened as it traded below all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), signalling sustained bearish momentum. The Mojo Score of 48.0 and the 'Sell' rating underscored the deteriorating trend.

20 February 2026: New 52-Week Low Amid Market Gains

Hexaware’s downtrend culminated on 20 February with the stock falling 3.61% to Rs.521.50, marking a fresh 52-week low of Rs.520.5 intraday. This decline occurred despite the Sensex gaining 0.41% to 36,674.32, highlighting the stock’s underperformance. The three-day consecutive losses totalled 12.46%, reflecting sustained selling pressure. Financially, the company’s recent quarterly results showed the lowest PBDIT in recent quarters at Rs.377.90 crore and a reduced operating margin of 10.86%. The 100% promoter share pledge, doubled over the last quarter, added to market concerns about governance and potential forced selling risks.

Hexaware’s valuation metrics remain moderate but reflect the market’s cautious stance, with a price-to-book ratio of 5.2 and a price-to-earnings ratio of 23.34. The stock’s long-term returns lag the Sensex, with a one-year decline of 34.89% compared to the Sensex’s 9.49% gain. Despite these challenges, the company maintains a low debt-to-equity ratio and attractive return on equity of 23.3%, indicating operational efficiency amid adversity.

Key Takeaways

Valuation and Rating Shift: The downgrade to a 'Sell' rating and the shift from attractive to fair valuation grades reflect growing caution amid flat financial performance and premium multiples relative to historical levels.

Financial Performance: Despite a 24% profit increase over the past year and strong ROCE (30.92%) and ROE (23.25%), Hexaware’s recent quarterly results showed margin pressure and the lowest PBDIT in recent quarters, contributing to negative sentiment.

Technical Weakness: The stock’s decline below all major moving averages and the fresh 52-week low at Rs.520.5 signal sustained bearish momentum and heightened downside risk.

Promoter Share Pledging: The doubling of pledged promoter shares to 100% adds a significant risk factor, potentially exacerbating price declines in volatile markets due to forced selling.

Conclusion

Hexaware Technologies Ltd’s performance in the week ending 20 February 2026 was marked by a clear downtrend, driven by a combination of valuation concerns, flat financial results, and technical deterioration. The downgrade to a 'Sell' rating by MarketsMOJO and the fresh 52-week low underscore the challenges facing the stock amid broader market gains. While operational efficiency remains a relative strength, the elevated promoter share pledging and weakening price momentum suggest caution. Investors should closely monitor upcoming financial disclosures and any changes in shareholding patterns to reassess the stock’s outlook.

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