Hexaware Technologies share price fell 3 percent in early trade on April 30 after the company announced its March quarter earnings.
The company has reported a 4.7 percent sequential increase in consolidated profit at Rs 174.96 crore in the first quarter of CY20, driven by forex gains.
The company's profit in the previous quarter stood at Rs 167.8 crore. Forex gains for the quarter were at Rs 43.41 crore against Rs 0.38 crore in the December quarter.
The company follows the calendar year (January-December) as its financial year.
Revenue from operations grew by 0.8 percent quarter-on-quarter to Rs 1,541.75 crore, but dollar revenue declined 1.7 percent to $210.6 million and revenue degrowth in constant currency was at 1.1 percent QoQ.
Also Read - Hexaware Q1 sequential profit up 4.3%, suspends FY20 guidance
Morgan Stanley has maintained equal-weight rating on the stock and raised the target to Rs 275 from Rs 250 per share.
The company sees an opportunity to gain a market share. The margin weakness could continue in the near term, said Morgan Stanley.
We see limited catalysts in the near term and trim CY20 EPS estimate 4.8%, but largely maintain C21/C22 EPS estimate, it added.
Morgan Stanley expects longer-term revenue growth better than some of the peers.
Motilal Oswal has downgraded EPS estimates over FY21–22E by 13–15%. The stock is currently trading at 15x Mar’21 E EPS.
It has maintained a neutral rating with a target of Rs 306. The target price is based on 13x Mar’22E EPS.
Relatively weaker commentary (v/s that of peers) and the possibility of a further downside in certain key accounts may keep multiples under check. Additionally, a heavier balance sheet and the overhang around an impending stake sale by Barings should further weigh on multiples, it added.
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