Dear Members,

We have released 8th Jun’20: Special situation opportunity on the proposed de-listing of shares of Hexaware Technologies Ltd (NSE Code – HEXAWARE). The same has also been produced below. For details and other updates, please log into the website at the following link –

Note: For any queries, mail us at [email protected]

Date: 8th Jun’20

CMP – 331.20 (BSE); 330.85 (NSE)

Rating – Positive – 4% weightage; this is not an investment advice (refer rating interpretation)


Hexaware Technologies (NSE – HEXAWARE)

Hexaware is a global provider of IT and Process outsourcing services. The company’s key offerings include managing large IT applications in real time as well as in providing high value services around packaged enterprise applications such as SAP and PeopleSoft.

Hexaware’s global operations are located in North America, Europe and Asia Pacific.

The company has presence in the following segments: banking & financial services (42.8% of topline) followed by healthcare & insurance (17.8%), manufacturing & consumer (15.3%) and travel & tourism (11.1%).

Baring Private Equity Asia is the promoter of the company and holds 62.4% stake in the same through its holding company HT Global IT Solutions.


De-listing offer from the Promoters

As mentioned above, Baring, through HT Global IT solutions holds 62.4% stake in the company.

On 5th Jun’20, the company informed the exchanges that it has received a letter from the Promoters with a proposal to voluntary de-list the equity shares of the company from the exchanges.

Additionally, the Promoters have indicated a price of Rs 285 per share at which they will be willing to accept the equity shares in the offer.

The company has convened a meeting of the Board of Directors on 12th Jun’20 to consider the proposal for voluntary delisting of the equity shares and related matters.


Important Points with respect to de-listing offer

Hexaware’s performance over the years has been consistent with the company recording ~18% CAGR in sales over the last 5 years, 15.5% CAGR in operating profits and 14% CAGR in PBT.

The company is debt free on net basis and has consistently been paying out 40% + of profits as dividends.

On the trailing twelve months earnings, the stock is currently trading around 14.5 times earnings.

Thus, both fundamentally and from the viewpoint of valuations the stock is much better in comparison to several other de-listing opportunities of the past.

Also, Baring acquired (through HT Global) controlling stake in Hexaware in 2013 and since 2016 it has been exploring the options of the sale of Hexaware.

In 2018, it managed to sell an 8% stake through block deals for Rs 1,120 crore, thus giving the company then a market capitalization of Rs 14,000 crore against current market cap of Rs 9,900 crore.

This delisting offer seems like an attempt to make use of the depressed market conditions to take the company private and sell it subsequently to other interested investors.


Rationale behind this opportunity

In the past many de-listing cases, shareholders have tendered shares at 50-200% premium to the floor prices and in some of the cases promoters have accepted such prices.

In Jan’18, Hexaware touched a high of 500 and before the covid-19 induced market fall, it was trading around 340-370 odd levels. As mentioned above, Promoters have already indicated an offer price of Rs 285 per share and like most of the cases, we expect the shareholders to tender their shares at substantial premium to the indicative offer price.

However, here again, we would not like to participate in the reverse book building (RBB) and rather take advantage of appreciation in stock price (if at all) in the run up to RBB.

As the current market price is only around 16% higher than the indicative offer price, we think the risk-reward ratio is quite favourable on the opportunity.



We are still some steps away from the reverse book building, if the promoters backtrack on the de-listing proposal or the board does not approve the proposal, there would be a rush to exit from the stock and one may not be able to exit before the stock has corrected by 10-20%.

Secondly, if public shareholders do not approve the de-listing proposal with requisite majority the above-mentioned scenario of 10-20% correction will pan out.

Merchant Banker’s due diligence report is pending and Board of Directors can give their approval to the delisting proposal only if there are no anomalies and the company has been in compliance with the delisting regulations.


Disclosure: I do not have any holding in Hexaware Technologies Ltd.


Best Regards,

Ekansh Mittal
Research Analyst  
Ph.: +91-727-5050062, Mob: +91-9818866676
Email: [email protected]


Rating Interpretation

Positive – Expected return of ~15% + on annualized basis in medium to long term for investment recommendations and in short term for Special situations
Neutral – Expected Absolute return in the range of +/- 15%
Negative – Expected Absolute return of over -15%
Coverage closure – No further update on the stock
% weightage – allocation in the subject stock with respect to equity investments

Short term – Less than 1 year
Medium term – Greater than 1 year and less than 3 years
Long term – Greater than 3 years


Research Analyst Details

Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

Analyst ownership of the stock: No

Details of Associates: Not Applicable

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Disclosure (SEBI RA Regulations)

Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No

Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No

Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No

Whether it or its associates have received any compensation from the subject company in the past twelve months – No

Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No

Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No

Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No

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