Hexaware Technologies Returns to Stock Market with AI-Focused IPO

Hexaware Technologies' Return to the Stock Market

Hexaware Technologies, a global digital and technology services company centered around artificial intelligence (AI), is set to make its return to the Indian stock market with an Initial Public Offering (IPO) aimed at raising Rs 8,750 crore ($1.05 billion) 1

1

. This marks a significant event in the Indian IT sector, as it represents the largest fundraising by any IT services company in India, surpassing TCS's Rs 4,700 crore IPO from two decades ago 1

1

2

2

.

IPO Details and Market Response

The IPO, which opened for public bidding on February 12 and closed on February 14, consists entirely of an Offer for Sale (OFS) of 12.35 crore shares 2

2

. The company set a price band of Rs 674-708 per share, with a minimum lot size of 21 shares 3

3

.

The market response to the IPO has been mixed:

• The overall subscription rate reached 2.66 times by the end of the bidding process 1

  1

  .
• On the final day of bidding, the retail portion was subscribed by 7%, non-institutional investors by 4%, and qualified institutional buyers by 39% 2

  2

  .
• Ahead of the listing, the grey market premium (GMP) stood at 0%, indicating cautious investor sentiment 1

  1

  .

AI-Centric Business Model

Hexaware Technologies positions itself as an AI-focused company, providing innovative solutions for customers' digital transformation journeys 4

4

. The company operates across six industry segments: financial services, healthcare and insurance, manufacturing and consumer, hi-tech and professional services, banking, and travel and transportation 5

5

.

Key aspects of Hexaware's AI integration include:

• Embedding AI into all aspects of its services 4

  4

  .
• Leveraging AI to build solutions for clients, driving improvements in productivity and utilization 1

  1

  .
• Offering services such as design and build, secure and run, data and AI, optimize, and cloud services 3

  3

  .

Financial Performance and Valuation

Hexaware has demonstrated strong financial growth:

• Dollar revenue and rupee revenue have grown at a CAGR of 14% and 20% respectively over CY21-23 3

  3

  .
• The company maintained a stable EBIT margin during this period 3

  3

  .
• As of September 2024, Hexaware reported a healthy cash balance of Rs 1,346 crore 1

  1

  .

The company is valued at a CY24E P/E of 37.6x based on the upper price band, which analysts consider relatively cheaper compared to its industry peers 1

1

.

Investor Interest and Recommendations

Prior to the IPO, Hexaware raised Rs 2,598 crore from anchor investors, including prominent names such as SBI MF, HDFC MF, AXIS MF, ICICI Prudential MF, ADIA, and Goldman Sachs 5

5

. Analysts have generally recommended subscribing to the IPO from a long-term perspective, citing attractive valuations and the company's strong potential in AI-driven growth 1

1

3

3

.

As Hexaware Technologies re-enters the public market, its focus on AI and digital transformation positions it as a significant player in the evolving landscape of IT services. The success of this IPO could potentially set a precedent for future AI-centric companies looking to go public in India.