Nomura upgrades Hexaware to 'buy'

Nomura has upgraded the ratings of Hexaware Technologies to ‘Buy’ and set a target price of Rs 105. Hexaware shares have corrected by 25% since December 7, post management’s FY12 revenue growth guidance cut and guidance for a 500-700bp q-q dip in 4Q margin on project stoppage at one of its top clients. “We expect the worst to be over by the fourth quarter and see strong sequential earnings momentum post 4Q, driven by improved revenue growth and ~500bp margin gain over the subsequent four quarters. While our estimates are largely unchanged, we believe the stock correction is exaggerated and find valuations of 8x/7x FY13F/FY14F EPS inexpensive,” Nomura said in a report.