The Hindu Business Line : Hexaware maintains upward trend

Brokers said that good revenue growth coupled with the fact that the company's performance has been better than some of the top-rung IT companies has aided the counter's bullish run.

The stock has appreciated by more than 34 per cent from Rs 390.10 levels as on July 1 to current levels of Rs 523 on the BSE. On Monday it ended at Rs 523, up 1.94 per cent with around 55,050 shares traded.

"A predictable earnings stream and sound client base make for a good fundamental story," said an analyst tracking the company.

Dealers, however, said that the last Rs 70-80 run-up in the counter has been momentum-driven.

The company's second-quarter numbers reportedly surpassed expectations, with many of the view that it will continue to log in good numbers.

"Every quarter there is more visibility in terms of business momentum and there is the fact that it has outperformed the industry average," said sources.

Analysts said that while currently guided earnings per share are around Rs 26, if it sustains growth pattern one could be looking at more than Rs 35-36 for the current fiscal.

According to Mr Nimsih Mistry, analyst of P-Sec, at the current valuations it is fairly valued.

Yet there is growing concern that if the run-up in the counter continues, valuations could get skewed. Analysts maintain that the next quarter numbers are crucial in terms of whether the company will maintain revenue growth.

Additionally, there are concerns over whether or not it will continue to add on clients at the current pace.

"Valuations in the near term look slightly expensive. There are also concerns over the company's over-dependence on Peoplesoft. In the event of Oracle's bid for Peoplesoft going through, one could see some shifts occurring," reasoned an analyst with a leading domestic brokerage.

Hexaware provides custom software services to airlines, banking and financial services, insurance, securities and healthcare industries.

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