IT services firm Hexaware Technologies will report its Q1FY20 earnings on Wednesday and the street is expecting a double-digit profit growth this time around.
- A dollar revenue growth of 2.2 percent, margins are seen up by 20 basis points (bps) to 14.2 percent while profits could be significantly higher at about 17-18 percent.
- The company follows a calendar year accounting practice, so they have already given a guidance for calendar year 2019 which stands at 12-14 percent.
- However, when they gave this guidance, they also said that growth will be back-ended which means growth will be stronger in the second half of the year versus the first half which is why Q1CY19 growth is not going to be as high.
- Margins are seen higher by 20 bps because in the prior quarter, margins had collapsed by 140 bps and there will be a part reversal there.
- The key to track from Hexaware will be the mergers and acquisitions (M&A) policy because the company said that they expect to spend $250-300 million in cash for acquisitions in the next two-three years. The attrition rates for the company are also quite high in the prior quarter at 17 percent.