Hexaware margin rebounds, and the stock breaks its post-results losing streak
Sequential profit growth came despite a higher tax rate, while year-on-year costs grew faster than revenue and kept margins below the IT peer median.
Filed 06 May 2026, 21:19 IST · after market close · Hexaware Technologies Ltd (HEXT)
Key takeaways
- Q4 consolidated operating margin rebounded 4.94 percentage points sequentially as revenue rose 3.88% while expenses fell 1.87%.
- Year-on-year net profit growth was 7.49%, slower than 12.63% revenue growth because expenses grew 13.51% and interest rose 29.46%.
- The stock gained 5.74% one session after the results, reversing a history of four consecutive post-results declines with a 7.02% median absolute move.
Price around the results
Q4 margin recovered from the Q3 trough
Hexaware reported consolidated revenue growth of 3.88% sequentially and 12.63% year on year, with net profit rising 20.58% sequentially and 7.49% year on year. Operating margin recovered 4.94 percentage points from Q3's 10.86%, but remained below Q2's 17.26%, so the quarterly trend is a rebound rather than a sustained rise. At 15.8%, the margin was 3.89 percentage points below the 19.69% median for 19 Information Technology peers and ranked third from the bottom.
Expense growth still exceeded revenue growth year on year
Year on year, expenses grew 13.51% against 12.63% revenue growth, narrowing operating margin by 0.65 percentage points. Sequentially, the mix improved: revenue increased 3.88% while expenses declined 1.87%, driving the margin recovery. Interest expense rose 29.46% year on year but fell 7.05% sequentially. Other income was 4.59% of pre-tax profit, so it was not the main source of reported profit; the sequential tax-rate increase of 15.22 percentage points also limited the benefit from the operating recovery.
Management reiterates CY26 growth and margin guidance
Management reaffirmed its CY26 baseline revenue growth guidance of 7.6% and EBIT margin guidance of 13.0%-14.0%, saying margins should improve through the year, particularly in the second half. The company said previously won deals and recent wins should support growth momentum, with Banking, H&I and M&C expected to lead while Technology and Transportation lags because of macroeconomic conditions. Management said AI in software development was the largest deal-activity and differentiation driver in Q1, and that a Phase II win with a global bank is expected to contribute meaningful revenue in H2 CY26.
The market response was unusual for this stock
The stock opened 3.41% higher on the first trading session after the results, ended that session up 0.26%, and was up 5.74% on the following session. That response contrasts with the previous four post-results moves, all declines, whose median absolute move was 7.02%. Trading volume was 4.08 times normal on the first session after the filing.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹3,613 cr | ₹3,478 cr | +3.88% | +12.63% |
| Other income | ₹22 cr | ₹103 cr | -78.83% | +393.18% |
| Expenses | ₹3,042 cr | ₹3,100 cr | -1.87% | +13.51% |
| Operating profit | ₹571 cr | ₹378 cr | +51.05% | +8.15% |
| Operating margin (%) | 15.80% | 10.86% | — | — |
| Interest | ₹29 cr | ₹31 cr | -7.05% | +29.46% |
| Depreciation | ₹91 cr | ₹124 cr | -26.68% | +23.40% |
| Profit before tax | ₹473 cr | ₹326 cr | +45.25% | +8.37% |
| Tax | ₹121 cr | ₹34 cr | +257.52% | +10.99% |
| Net profit | ₹352 cr | ₹292 cr | +20.58% | +7.49% |
| EPS (₹) | ₹5.77 | ₹4.79 | +20.46% | +7.25% |
Operating margin of 15.80% compares with a Information Technology sector median of 19.69% across 19 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.26% | +0.28% |
| Next session | +5.74% | — |
| 5 sessions | +5.16% | +7.80% |
| 15 sessions | +10.59% | — |
| 30 sessions | +8.76% | — |
Volume on the results session was 4.08× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Q1 saw strong deal momentum across consolidation, outsourcing and transformation programmes.
- AI in SDLC was the largest driver of deal activity and differentiation in Q1.
Guidance & outlook
- Hexaware reaffirmed its CY26 baseline revenue growth guidance of 7.6%.
- Previously won deals and recent wins are expected to improve growth momentum through CY26.
- Banking, H&I and M&C are expected to lead Hexaware’s CY26 growth.
- Hexaware reiterated EBIT margin guidance of 13.0%-14.0%.
- Margin is expected to improve during the year, especially in H2, with a higher exit rate.
New orders
- Hexaware closed a Phase II win with a large global bank, expected to contribute meaningful revenue in H2 CY26.
- Hexaware secured consolidation wins with a European bank and a global professional services firm.
New initiatives
- Hexaware is integrating AI into every layer of IT operations.
- Hexaware partners with customers to design and build agentic AI models.
- Hexaware’s AI foundation includes infrastructure, frameworks, orchestration and reusable components.
Competition
- Hexaware was selected as one of three strategic vendors in the GSE consolidation programme.
Problems & risks
- The Technology and Transportation vertical is expected to lag in CY26 because of macroeconomic conditions.
What to watch
- Whether revenue growth tracks the 7.6% CY26 baseline guidance.
- Whether operating margin holds above 15.8% after the rebound from Q3's 10.86%.
- Whether the 13.0%-14.0% EBIT margin guidance is reflected in subsequent quarterly profitability.