Hexaware Technologies IPO Subscribed 2.7 Times, Driven by Strong QIB Demand

In a challenging market, Hexaware Technologies' initial public offering (IPO) secured a strong response, receiving 2.7 times subscription, primarily fueled by bids from qualified institutional buyers (QIBs). The ₹8,750 crore IPO—the largest ever by an Indian IT services company—marks a major step toward the Carlyle Group-backed firm's relisting on Indian stock exchanges. Notably, the QIB portion saw an overwhelming 9.1 times subscription.

However, demand from retail investors, high-net-worth individuals (HNIs), and employees remained subdued, with subscription levels of just 11%, 20%, and 32%, respectively.

Ahead of the IPO, Hexaware allotted shares worth approximately ₹2,600 crore to anchor investors. The issue was priced between ₹674 and ₹708 per share, valuing the company at ₹43,025 crore. The offering is a complete secondary sale by private equity giant Carlyle, reducing its stake in Hexaware from 95.5% to 74.7%.

Hexaware was previously delisted from Indian stock exchanges in November 2020 under Baring Private Equity's ownership. In 2021, Carlyle, through its affiliate CA Magnum Holdings, acquired the company for approximately $3 billion.

According to SBI Securities, "Hexaware is valued at a 2024 estimated (annualized) price-to-earnings (P/E) ratio of 37.6x, making it relatively attractive compared to industry peers. The company has demonstrated strong financial performance, with dollar revenue, rupee revenue, and profit after tax (PAT) growing at a CAGR of 14%, 20%, and 15%, respectively, from 2021 to 2023, alongside stable EBIT margins. Additionally, it maintains a robust cash balance of ₹1,346 crore as of September 2024. We recommend subscribing to the issue at the cut-off price for long-term investment gains."