Confident of outperforming IT industry in 2013: Hexaware

Moneycontrol Bureau

Software services provider Hexaware Technologies , which earlier this month lowered its guidance for the fourth quarter, is still "reasonably confident" it will outperform the wider industry in 2013, its  chairman Atul Nishar said on Tuesday.

The company had cut its fourth quarter revenue guidance to USD 92 million from USD 94.7-96.5 million, citing changes to a project plan for a customer and impact on account of hurricane Sandy, which devastated the US east coast last month. With the revision in revenue outlook and continued investments made for the medium term, there would be an impact on profit margins, it had added.

Nishar told CNBC-TV18 that the company's margins will be hit by 5-7 percent in the fourth quarter, but said that the relationship with the concerned client remained intact and the project also continued.

"This is a large client, one of our top 10 clients and we are doing multiple projects as a part of this large engagement. In one of the projects with this client there is replanning which was not foreseen earlier and the project continues but because of the replanning the current quarter revenue has been adversely impacted...I would like to assure that the relationship with that client remains very solid, there is no change there. There are multiple projects which are all going extremely well and this particular change in the plan is nothing to do with any delivery issue but more on a broader perspective of what the client wanted to do," he said.

Nishar said the worst will be over the company in the fourth quarter and margins will improve from the Jan-March quarter. He further added that the growth trajectory remained on track despite challenging environment, although growth rates could vary.

In 2012, the company is expected to grow 18 percent, according to him. Industry body NASSCOM expects the IT services sector will meet the lower end of its 11-14 percent growth guidance for FY13.

Several analysts have downgraded Hexaware since the company's guidance cut announcement. Portugese investment bank Espirito Santo, for instance, has urged investors "sell" the stock.

"Outside the new deals announced in Q2 and Q3 CY12, which will contribute 8% incremental growth in CY13, our concerns are more about the ability to generate growth from existing clients, rather than its ability to win new deals. We now expect Hexaware's CY13 growth to be in low double digits at best," analysts Soumitra Chatterjee and Nitin Padmanabhan said.

Nomura and Macquarie too downgraded the stock to "neutral" and "underperform" respectively.

Hexaware shares were up 0.5 percent at Rs 87.50 on NSE.  The stock is down over 18 percent since the announcement was made on Dec 7.

Click on next page for Nishar's interview to CNBC-TV18.