Motilal Oswal has maintained a 'Buy' rating on Hexaware Technologies with a price target of Rs 720. This follows the company's second-quarter results, where it lowered its full-year revenue growth guidance to 6-7% from 7.6% due to slower project ramp-ups. Despite this, analysts see potential for medium-term growth driven by investments in artificial intelligence and large account acquisition.
Motilal Oswal has issued a 'Buy' recommendation for Hexaware Technologies, setting a price target of Rs 720 per share. The brokerage's outlook is based on its assessment of the company's expected earnings growth through 2027. This update comes in the wake of the company's second-quarter financial results for 2026, which showed a mix of operational progress and cautious guidance.
In the second quarter, Hexaware reported revenue of $405.4 million, reflecting a 6.1% increase compared to the same period last year. The company's operating margin, or the profit earned from core business operations, also improved, reaching 13.6%—an increase of 68 basis points from the previous quarter. However, the management chose to lower its revenue growth expectations for the full financial year to a range of 6-7%, down from the earlier target of 7.6%.
According to the brokerage, this guidance revision is mainly linked to delays in project ramp-ups. In the IT services industry, a project ramp-up refers to the time taken between signing a contract and actually beginning the work and billing the client. When these starts are delayed, it affects the revenue recognized within the current year. The brokerage report emphasizes that this is an execution challenge rather than a fundamental drop in client demand.
Looking forward, the brokerage remains optimistic about the company's path, citing Hexaware's continued spending on artificial intelligence and its focus on winning larger business accounts. These strategies are expected to support growth in the medium term.
Investors should keep in mind that the IT sector is currently facing broader challenges. Macroeconomic headwinds, including geopolitical instability in regions like the Middle East, have created a difficult operating environment for many companies. The company's ability to maintain its profit margins while continuing to invest in new technology and talent will be a key area for shareholders to monitor. Moving forward, the most important update for investors will be whether the company can successfully accelerate the start of these delayed projects to meet its revised targets.