Hexaware Technologies shares gained momentum following its recent 'AI Day' event where the company outlined a $300 billion AI-led growth strategy. However, ICICI Securities has maintained a 'HOLD' rating with a target price of Rs 580, citing caution regarding the company's recent profit decline and the challenges of transitioning to new technology models.
Hexaware Technologies saw its share price rally on August 24, 2026, following the company’s recent 'AI Day' event, where management detailed a new strategy focused on artificial intelligence. Despite the market enthusiasm, ICICI Securities has reiterated a 'HOLD' recommendation on the stock, setting a target price of Rs 580.
The brokerage's cautious stance comes after the company unveiled its 'Zero Friction, Infinite Momentum' strategy on August 21, 2026. Hexaware has identified an addressable market opportunity of over $300 billion related to AI and technology transformation. This new strategy aims to position the company to capture demand as businesses shift toward automated and AI-driven solutions.
While the growth narrative around AI is strong, investors are balancing this against the company’s recent financial performance. In its latest quarterly results for Q1 CY26, Hexaware reported revenue growth of 12.16% year-on-year, reaching approximately Rs 13,430 crore. However, the company also reported a 13.16% decline in net profit, which fell to Rs 330 crore. This mismatch between rising revenue and falling profit reflects the costs associated with the company’s pivot toward these new AI-led services.
A key risk noted by analysts is the phenomenon of 'AI-led deflation' in traditional IT services. Management has acknowledged that the shift toward AI could lead to a 20-25% annual decline in the value of traditional IT contracts over the next four years. For investors, this means the company must successfully replace this shrinking traditional business with high-value, new-age AI revenue to maintain profit margins. If the conversion of these new AI engagements into profitable contracts is slower than expected, margins could remain under pressure.
On the positive side, the company recently addressed market concerns regarding operational security. On August 19, 2026, Hexaware clarified that reports of a data breach were unfounded following an internal investigation, which helped stabilize investor sentiment.
The most important factor for investors to track in the coming quarters will be the company’s ability to turn its AI-led contract wins into actual profit growth. While the long-term AI strategy is aimed at expansion, the immediate monitorable is whether Hexaware can improve its margins while managing the transition away from traditional, lower-value service lines.