Stake sale buzz: Why Hexaware is on a roll today

On the back of a potential stake sale, Hexaware Technologies, a mid-sized IT company, continued its upward momentum for the second day as its stock was trading almost two percent higher at Rs116.6 per share. This was in addition to the 6.5 percent gain record by the company on Tuesday.

According to a report in the Business Standard, several players - Japan’s NEC Global, NTT Group and the US PC manufacturing Dell have initiated their negotiations with Hexware’s founder and chairman Atul Nishra and two other private equity investors in the company, General Atlantic and Chrys Capital.

However, the company’s steep valuation expectation of close to $700-800 could act as a spoiler. Here are some points about the company

•The company reported a sharp 123 percent jump in net profit to Rs88.25 crore on the back of a 44 percent growth in net sales to Rs431.88 crore for the December quarter.

•Promoters holding stands at 28.16 percent, while Foreign institutional holding stands at 41.44 percent. Of the FII holding, Dali Ltd (9.76 percent), FID Mauritius (8.85 percent) and GA Global Investments (7.21 percent) are some of the major institutional holders in the company.

•It is a debt free company and has cash of Rs437.7 crore as of December quarter.

•Morgan Stanley and Credit Suisse are advising Hexaware’s shareholders to find potential suitors for the company.

•It has a market cap of Rs 3,422 crore, price to earnings multiple of 14.76 times (industry P/E is 23.9 times), and earnings per share of Rs7.9 per share.