Hexaware Technologies cuts FY26 revenue guidance to 6-7% amid macro headwinds
Hexaware Technologies reports Q2CY26 revenue of ₹38,452 million, up 17.9% YoY, with EBIT surging 59.1% to ₹5,236 million. However, PAT declines 13.0% to ₹3,302 million due to exchange losses and absence of contingent consideration gains. The company reduces full-year revenue growth guidance to 6-7% citing macro challenges but maintains EBIT margin outlook of 13.0%-14.0%.
*this image is generated using AI for illustrative purposes only.
Hexaware Technologies reduced its full-year revenue growth guidance for CY26 to a range of 6-7%, down from the previously stated 7.6%, citing delays in deal ramp-ups and deteriorating macroeconomic conditions. The company, which reported consolidated revenue of ₹38,452 million for the quarter ended June 30, 2026, attributed the narrowed pathway to structural challenges despite delivering solid top-line growth of 17.9% year-on-year in Q2CY26. Management reiterated its EBIT margin guidance of 13.0%–14.0% for the fiscal year, signaling confidence in operational leverage despite the revised top-line outlook.
The Board of Directors approved the unaudited standalone and consolidated financial results on July 29, 2026, following a limited review by statutory auditors B S R & Co. LLP. The results were filed with the National Stock Exchange of India Limited and BSE Limited in compliance with Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. An interim dividend of ₹8.50 per equity share was declared for the quarter, payable on May 15, 2026, marking an increase from ₹5.75 per share in the corresponding quarter of the previous year.
Financial Performance Highlights
| Metric | Q2CY26 (₹ Mn) | Q1CY26 (₹ Mn) | Q2CY25 (₹ Mn) | YoY Change |
|---|---|---|---|---|
| Revenue from Operations | 38,452 | 36,130 | 32,607 | +17.9% |
| Employee Benefits Expense | 22,664 | 21,457 | 19,078 | +18.8% |
| Other Expenses | 9,735 | 8,965 | 9,485 | +2.6% |
| Depreciation & Amortisation | 817 | 907 | 752 | +8.6% |
| EBIT | 5,236 | 4,801 | 3,292 | +59.1% |
| Profit Before Tax | 4,407 | 4,728 | 4,683 | -5.9% |
| Total Tax Expense | 1,105 | 1,212 | 886 | +24.7% |
| Net Profit After Tax | 3,302 | 3,516 | 3,797 | -13.0% |
EBIT margin improved to 13.6% in Q2CY26, up 68 basis points quarter-on-quarter and 352 basis points year-on-year. This operational leverage occurred despite employee benefits expense rising 18.8% year-on-year to ₹22,664 million, reflecting headcount additions and inflationary pressures. The company added 708 employees net in the quarter, bringing total headcount to 34,506. Voluntary attrition in the IT segment stood at 11.2% on a trailing twelve-month basis.
What the Numbers Show
A divergence between operating performance and bottom-line profitability characterizes this quarter. While EBIT surged 59.1% year-on-year, indicating strong core business execution and pricing power, PAT contracted by 13.0%. This disconnect is largely attributable to 'Other Income,' which swung from a positive ₹13 million in Q2CY25 to a loss of ₹501 million in Q2CY26, primarily due to exchange rate differences amounting to ₹783 million. Additionally, the absence of gains from the change in value of contingent consideration, which contributed ₹1,587 million in the prior year, further pressured pre-tax profits. The effective tax rate also increased, with total tax expense rising 24.7% to ₹1,105 million against a lower profit base.
Segment and Geographic Growth
Healthcare & Insurance emerged as the strongest vertical, contributing ₹8,897 million in revenue, up 32.0% year-on-year. Financial Services remained the largest segment at ₹11,029 million, growing 12.7% year-on-year. Professional Services saw a sharp quarter-on-quarter jump of 13.3%, though it declined 3.4% year-on-year. Geographically, Asia Pacific led growth with a 24.8% year-on-year increase, followed by Europe at 10.9% and Americas at 3.5%. Management expects Healthcare & Insurance, Banking, and Manufacturing & Consumer to lead growth for CY26, while Travel & Transportation is expected to lag due to macro factors.
Balance Sheet and Cash Flow
Total assets increased to ₹115,757 million as of June 30, 2026, from ₹109,046 million at the end of December 2025. Goodwill rose to ₹37,710 million following recent acquisitions. Cash and cash equivalents declined to ₹16,408 million from ₹19,708 million, driven by significant dividend payouts of ₹5,181 million during the first half of CY26. Operating cash flow for the six months ended June 30, 2026, was ₹3,928 million, down from ₹4,565 million in the prior year period, partly due to higher working capital requirements. Days Sales Outstanding (DSO) for billed plus unbilled receivables stood at 78 days.
Historical Stock Returns for Hexaware Technologies
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +4.24% | +10.40% | +19.04% | -10.99% | -16.30% | -18.92% |
How might the significant ₹783 million exchange rate loss impact Hexaware's hedging strategies and future currency risk exposure in Q3CY26?
Given the 11.2% voluntary attrition rate and rising employee benefit costs, what specific retention or productivity measures is management implementing to protect EBIT margins?
Will the lagging growth in the Americas region (3.5% YoY) necessitate a strategic pivot in sales focus toward higher-growth Asia Pacific markets for the remainder of CY26?
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