Hexaware Technologies, the mid-sized IT company, said its revenues for the October-December quarter will be flat compared with the July-Sept quarter.
Q3 net up 3% QoQ; to resume guidance from next fiscal
MUMBAI: Hexaware Technologies, the mid-sized information technology company, said its revenues for the October-December quarter will be flat compared with the July-September quarter.
This, according, to a senior company official, is the result of a deliberate strategy to rationalise some “not-so-profitable” accounts.The company, which had stopped giving guidance due to forex volatility, now plans to resume guidance from the next fiscal.
“We have begun to rationalise some of our low-margin accounts. This effort will continue till the rest of the year, which will see us stop working on 12-15 accounts.
Over the next 2-3 quarters this will result in about $3 million hit on the topline, but profitability would increase,” Rusi Brij, vice-chairman and chief executive officer, said.
Hexaware on Thursday declared its July-September quarter results, which saw consolidated gross revenue at Rs 255 crore, a 3% drop from the previous quarter and 13% drop from the year ago period. Net profit, at Rs Rs 27 crore, is up 3% sequentially and down 22% on-year.
Brij said the company’s revenue was impacted since one of its clients, which was in the dreaded sub-prime space, shut shop during the quarter. “Also, some deals which we were tying to close during the quarter have been pushed forward.” he said.
The company has reported its highest ever orderbook position of $100 million, to be executed over the next three years.
The US’ contribution to the Hexaware’s topline has been coming down steadily over the last few quarters and Brij is now working on stopping the slide. What has made matter worst is its US head - Hari Murthy, has quit to join i-gate Global. Americas contributed 66.7% to Hexaware’s topline this quarter, against 69.1% three quarters ago.
“US is our top focus now. We have changed our marketing strategy hunting from farming. We expect a new U.S. head to join us by January who will take this strategy forward,” Brij said.
During the quarter, a strong rupee shaved off 40 basis points to Hexaware’s operating margins, which stood at 11.9%. Brij said the company was trying to protect margins by improving billing rates (up 8-10% for osshore), active forex hedging ($400 million), and improving utilization.
Hexaware today also said its board would soon consider share buy-back offer. “It is a confidence building measure. Given the strong business parameters, the board feels the currently the valuations are not correctly captured. Also, a share buy back would improve some key financial ratios,” he said.
On acquisition plans, Brij said the company hasn’t zeroed in on any target company yet. “Earlier we were looking at companies in SAP and HR space. Now we have expanded our search to financial services, travel and logistics also,” he said.
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