HEXT - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.9
| Stock Code | HEXT | Market Cap | 42,181 Cr. | Current Price | 691 ₹ | High / Low | 900 ₹ |
| Stock P/E | 40.8 | Book Value | 55.8 ₹ | Dividend Yield | 1.67 % | ROCE | 32.3 % |
| ROE | 25.7 % | Face Value | 1.00 ₹ | DMA 50 | 726 ₹ | DMA 200 | 707 ₹ |
| Chg in FII Hold | -0.16 % | Chg in DII Hold | 0.18 % | PAT Qtr | 271 Cr. | PAT Prev Qtr | 328 Cr. |
| RSI | 41.2 | MACD | -10.7 | Volume | 7,41,088 | Avg Vol 1Wk | 7,10,397 |
| Low price | 590 ₹ | High price | 900 ₹ | PEG Ratio | 4.18 | Debt to equity | 0.11 |
| 52w Index | 32.5 % | Qtr Profit Var | 37.8 % | EPS | 17.0 ₹ | Industry PE | 24.8 |
📊 Analysis: HEXT shows strong operational efficiency with ROE (25.7%) and ROCE (32.3%), supported by a low debt-to-equity ratio (0.11). However, valuations are stretched with a P/E of 40.8 compared to industry average of 24.8, and a PEG ratio of 4.18 indicates expensive growth. Dividend yield (1.67%) provides modest income support. Current price (₹691) is below both 50 DMA (₹726) and 200 DMA (₹707), reflecting weak momentum. RSI (41.2) suggests mild oversold conditions, while MACD (-10.7) indicates bearish sentiment. The ideal entry zone lies between ₹640–₹670 for long-term investors. If already holding, maintain positions for 3–4 years, leveraging strong fundamentals, but consider partial profit booking near ₹850–₹900 resistance levels.
✅ Positive
- Strong ROE (25.7%) and ROCE (32.3%) highlight efficient capital use.
- Low debt-to-equity ratio (0.11) ensures financial stability.
- Dividend yield (1.67%) adds shareholder value.
- Quarterly PAT of ₹271 Cr, though lower than previous, reflects solid earnings base.
⚠️ Limitation
- High P/E (40.8) compared to industry average (24.8).
- PEG ratio (4.18) signals overvaluation relative to growth.
- Stock trading below both 50 DMA and 200 DMA, showing weak momentum.
📉 Company Negative News
- Decline in quarterly PAT (₹271 Cr vs ₹328 Cr).
- FII holdings decreased (-0.16%), reflecting cautious foreign sentiment.
📈 Company Positive News
- EPS at ₹17.0 provides a stable earnings base.
- DII holdings increased (+0.18%), showing domestic institutional support.
- Volume stability (7.4L vs avg 7.1L) indicates consistent investor interest.
🏭 Industry
- IT services industry remains resilient with digital transformation demand.
- Industry PE (24.8) is lower than HEXT, suggesting peers may offer better valuations.
🔎 Conclusion
HEXT is a fundamentally strong company with high ROE/ROCE and low debt, making it a decent long-term candidate. However, valuations are stretched, so ideal entry is around ₹640–₹670. Existing holders should maintain positions for 3–4 years, leveraging dividends and growth, while booking profits near ₹850–₹900 resistance levels.
Would you like me to extend this with a peer benchmarking overlay (Mphasis, Coforge, L&T Technology Services) so you can compare HEXT’s valuation and profitability against its closest IT services peers?