HEXT - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.8
| Stock Code | HEXT | Market Cap | 31,238 Cr. | Current Price | 511 ₹ | High / Low | 900 ₹ |
| Stock P/E | 32.7 | Book Value | 53.3 ₹ | Dividend Yield | 2.25 % | ROCE | 33.5 % |
| ROE | 26.6 % | Face Value | 1.00 ₹ | DMA 50 | 492 ₹ | DMA 200 | 591 ₹ |
| Chg in FII Hold | -3.95 % | Chg in DII Hold | 3.73 % | PAT Qtr | 214 Cr. | PAT Prev Qtr | 142 Cr. |
| RSI | 63.2 | MACD | 10.8 | Volume | 5,94,323 | Avg Vol 1Wk | 8,93,210 |
| Low price | 400 ₹ | High price | 900 ₹ | PEG Ratio | 4.40 | Debt to equity | 0.13 |
| 52w Index | 22.2 % | Qtr Profit Var | -10.6 % | EPS | 15.0 ₹ | Industry PE | 20.4 |
📊 Core Financials
- Revenue Growth: Quarterly PAT at ₹214 Cr vs ₹142 Cr, showing sequential growth but overall -10.6% variation YoY.
- Profit Margins: ROE at 26.6% and ROCE at 33.5% indicate strong profitability.
- Debt Ratios: Debt-to-equity of 0.13 reflects low leverage.
- Cash Flows: Dividend yield of 2.25% provides decent shareholder returns.
- Return Metrics: EPS of ₹15.0 shows moderate earnings power.
💹 Valuation Indicators
- P/E Ratio: 32.7 vs industry PE of 20.4, suggesting overvaluation.
- P/B Ratio: Price ₹511 vs book value ₹53.3, trading at ~9.6x book.
- PEG Ratio: 4.40, indicating expensive growth expectations.
- Intrinsic Value: Current price above DMA 50 (₹492) but below DMA 200 (₹591), showing mixed momentum.
🏢 Business Model & Competitive Advantage
HEXT operates in IT services, digital transformation, and consulting. Its competitive advantage lies in strong delivery capabilities, diversified client base, and focus on automation. Profitability metrics are solid, but valuations remain stretched compared to peers.
📈 Entry Zone & Long-Term Guidance
Entry zone looks reasonable around ₹480–₹520 given RSI (63.2) and MACD (10.8) showing bullish momentum. Long-term holding is viable due to strong fundamentals and dividend yield, though valuations are on the higher side.
✅ Positive
- Strong ROE (26.6%) and ROCE (33.5%) reflect efficient capital use.
- Dividend yield of 2.25% provides steady income.
- Low debt-to-equity ratio (0.13) ensures financial stability.
⚠️ Limitation
- P/E ratio (32.7) above industry average (20.4), suggesting overvaluation.
- PEG ratio (4.40) highlights expensive growth expectations.
📉 Company Negative News
- FII holding decreased (-3.95%), showing reduced foreign investor confidence.
- Stock trading below DMA 200, reflecting weak long-term momentum.
📈 Company Positive News
- DII holding increased (+3.73%), showing strong domestic institutional support.
- Quarterly PAT improved sequentially from ₹142 Cr to ₹214 Cr.
🏭 Industry
The IT services industry continues to grow with demand for digital transformation and automation. Industry PE at 20.4 is lower than HEXT’s 32.7, suggesting relative overvaluation. Competitive pressures and global macroeconomic conditions may impact margins.
🔎 Conclusion
HEXT demonstrates strong profitability and low debt, but trades at premium valuations. Entry around ₹480–₹520 is reasonable for investors seeking exposure to IT services. Long-term holding is recommended for growth potential, though caution is advised due to high valuation multiples.
Would you like me to also compare HEXT with peers like Infosys, TCS, and Coforge to evaluate relative positioning in IT services?