Hexaware’s profit falls 13.04% despite 17.93% revenue growth
Negative other income equal to -11.37% of pre-tax profit and a higher tax rate offset the operating improvement; margin was 2.66 points below the IT peer median.
Filed 29 Jul 2026, 21:01 IST · after market close · Hexaware Technologies Ltd (HEXT)
Key takeaways
- Consolidated revenue grew 17.93% YoY, but net profit fell 13.04% as other income turned negative and the tax rate rose 6.15 percentage points.
- Operating margin improved 3.34 percentage points YoY but slipped 0.06 percentage points QoQ as expenses grew 6.50% against revenue growth of 6.43%.
- Management reduced CY26 growth guidance to 6-7% and retained EBIT margin guidance of 13.0%-14.0%.
Price around the results
Revenue growth did not translate into higher profit
Hexaware reported consolidated revenue growth of 17.93% YoY, while operating profit rose 49.68%. Profit before tax nonetheless declined 5.89% and net profit fell 13.04%, as other income moved to negative Rs 50.1 cr and accounted for -11.37% of pre-tax profit. The tax rate also increased 6.15 percentage points, while interest expense rose 56.94%.
Margin recovery stalled in the first quarter
Expenses grew 13.43% YoY, slower than revenue, lifting operating margin by 3.34 percentage points. Sequentially, however, expenses grew 6.50% against revenue growth of 6.43%, narrowing margin by 0.06 percentage points from Q4FY26. At 15.74%, Hexaware’s margin was 2.66 percentage points below the 18.4% median for 20 reported IT peers, placing it third from the bottom.
Management lowered growth guidance while retaining its margin range
Management said delayed deal ramp-ups and worsening macroeconomic conditions had narrowed its pathway to 7.6% growth, leading it to reduce CY26 growth guidance to 6-7%; it said this implied a 2.7% CQGR at the midpoint. The company reiterated EBIT margin guidance of 13.0%-14.0% and said H&I, Banking and M&C would lead CY26 growth, while T&T would lag because of macro conditions. Management also reported Q2 wins in consolidation, outsourcing and transformation, including more than $10 million of legacy-modernisation programmes.
The market reaction is still pending
The results were filed after market close, so there is no current-session reaction to assess. After the previous five results, the stock rose once and fell four times, with a median absolute move of 3.94%; the recorded moves ranged from +0.26% to -10.56%.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹3,845 cr | ₹3,613 cr | +6.43% | +17.93% |
| Other income | ₹-50 cr | ₹22 cr | — | — |
| Expenses | ₹3,240 cr | ₹3,042 cr | +6.50% | +13.43% |
| Operating profit | ₹605 cr | ₹571 cr | +6.04% | +49.68% |
| Operating margin (%) | 15.74% | 15.80% | — | — |
| Interest | ₹33 cr | ₹29 cr | +13.10% | +56.94% |
| Depreciation | ₹82 cr | ₹91 cr | -9.92% | +8.64% |
| Profit before tax | ₹441 cr | ₹473 cr | -6.79% | -5.89% |
| Tax | ₹111 cr | ₹121 cr | -8.83% | +24.72% |
| Net profit | ₹330 cr | ₹352 cr | -6.09% | -13.04% |
| EPS (₹) | ₹5.41 | ₹5.77 | -6.24% | -13.44% |
Operating margin of 15.74% compares with a Information Technology sector median of 18.40% across 20 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Hexaware recorded its first two AI-partner deal wins in Q2.
- Hexaware recorded multiple Q2 wins in Zero License across three archetypes.
Guidance & outlook
- Hexaware expects to continue structural growth for several quarters.
- Hexaware reduced its CY26 growth guidance to 6-7%, including 50 bps from the CP rebadging deal.
- Hexaware expects a 2.7% CQGR at the midpoint of its revised guidance and is confident of delivering it.
- H&I, Banking and M&C are expected to lead CY26 growth, followed by PS and FS, while T&T is expected to lag.
- Hexaware reiterated EBIT margin guidance of 13.0%-14.0%.
New orders
- Hexaware reported Q2 wins across consolidation, outsourcing and transformation programmes.
- Hexaware won more than $10 million legacy modernization programmes and a consolidation deal with another Top 15 customer.
New initiatives
- Hexaware introduced a category of deals to select an AI partner that can expand across every enterprise facet.
- Hexaware's partnership strategy covers foundation, domain and context layers.
Problems & risks
- Hexaware said its pathway to 7.6% growth narrowed because of delayed deal ramp-up and worsening macroeconomic conditions.
- Hexaware described the quarter as difficult.
- Hexaware expects the T&T vertical to lag in CY26 because of macroeconomic conditions.
What to watch
- Whether operating margin holds above 15.74% after the 0.06 percentage-point QoQ decline.
- Whether CY26 growth guidance remains at 6-7% and the 2.7% midpoint CQGR cited by management.
- Whether other income recovers from negative Rs 50.1 cr without another material drag on pre-tax profit.