Hexaware shares fall as analysts cut targets on weak Q3 results

Hexaware Technologies faced headwinds in its December quarter results, with constant-currency revenue growth falling short of analyst expectations while operating margins contracted sharply, triggering a wave of downgrades from major brokerages.

The company reported an 8.5% sequential decline in EBIT, with margins contracting by 140 basis points during the period. The weaker-than-anticipated performance and subsequent guidance revision prompted both Kotak Securities and Jefferies to lower their price targets on the stock, citing concerns over delayed deal ramp-ups affecting revenue momentum.

The margin pressure reflects execution challenges as Hexaware battles headwinds typical of the broader IT services sector, including customer spending caution and extended deal closure timelines. The third quarter's performance marks a setback for the mid-sized IT services player as it contends with managing client expectations amid a moderating demand environment.

Analysts have highlighted that the delayed monetisation of deal pipelines poses risks to near-term growth trajectories. The company's revised guidance suggests management expects continued pressure on profitability metrics in coming quarters as it navigates the challenging macro environment.

Investors have responded cautiously to the results, with the stock experiencing pressure following the announcement. Market observers will closely monitor whether Hexaware can stabilise margins and accelerate deal conversions in subsequent quarters to restore confidence among institutional shareholders.