📉 The Financial Deep Dive
Hexaware Technologies has announced its financial results for the quarter and year ended December 31, 2025 (Q4CY25 and CY25), revealing a mixed performance with robust top-line growth offset by a quarterly profit decline.
The Numbers:
- Revenue: For Q4CY25, revenue stood at INR 34,782 Mn, a healthy 10.3% increase YoY in INR terms (USD revenue grew 4.5% YoY). The full fiscal year 2025 saw INR revenue rise by 12.2% YoY to INR 1,34,304 Mn (USD revenue grew 7.6% YoY).
- Profitability: EBITDA margin expanded YoY for both periods. Q4CY25 EBITDA margin was 17.0% (+65 bps YoY), while CY25 margin reached 17.1% (+122 bps YoY). However, reported profit for Q4CY25 declined 9.1% YoY to INR 2,916 Mn. This was primarily attributed to a change in the value of contingent consideration. For the full year CY25, reported profit grew by a significant 16.6% YoY to INR 13,683 Mn.
- EPS: Basic EPS for Q4CY25 was INR 4.79 (down 8.8% YoY). For CY25, EPS increased by 16.2% YoY to INR 22.51.
The expansion in EBITDA margins is a positive indicator of operational efficiency and pricing power. However, the year-on-year decline in Q4 reported profit, despite revenue growth, warrants close scrutiny. The explanation of 'change in the value of contingent consideration' points to a specific accounting impact, likely related to past acquisitions. While the full-year profit growth is strong, the quarterly dip highlights the sensitivity of reported profits to such non-operational items.
The Grill:
Investors will likely focus on the nature and potential recurrence of the Q4 profit dip caused by contingent consideration adjustments. Understanding if this is a one-off accounting event or indicative of underlying performance issues in acquired entities will be key. Management's confidence in an "improving demand environment" for CY26 and the reiteration of a long-term growth strategy of "low-teen base growth with acceleration to mid-to-high teens" will be under scrutiny, with analysts seeking clarity on the drivers for this projected acceleration.
Balance Sheet & Cash:
A notable observation in the balance sheet is the substantial increase in Goodwill from INR 23,871 Mn in CY24 to INR 35,768 Mn in CY25. This 50% jump signals an aggressive acquisition strategy or revaluation of existing ones. The company maintained a healthy liquidity position, reporting USD 237 Mn in cash and cash equivalents as of December 31, 2025.
Risks & Outlook:
The outlook for CY26 is optimistic, with management projecting revenue growth to surpass CY25's 7.6%. The EBIT margin outlook is guided between 13.0% and 14.0% for CY26, with the second half expected to outperform the first. Strategic growth drivers include the launch of a new "Technology Products and Platforms (TPP)" vertical and the expansion of AI offerings. Key risks include the integration of acquired entities reflected in the increased goodwill and execution challenges in new strategic areas. Operational metrics such as a closing headcount of 33,844 and an IT voluntary attrition rate of 11.0% are important to monitor for workforce stability and cost management.