20 February 2025
Breaking into the Indian stock market with a splash, Hexaware Technologies made its mark by listing its shares at a premium, even though pre-listing cues seemed less than enthusiastic. The shares opened on February 19, 2025, at ₹745.50 on the NSE and ₹731 on the BSE, both sporting premiums against the initial IPO price of ₹708 — 5.29% and 3.25% respectively.
Notably, this event shattered records, as the company launched the largest IT services initial public offering (IPO) ever seen in India, valued at a whopping ₹8,750 crore. This achievement broke the previous record held by TCS since 2004.
Among the surprising facets of this launch was the zero grey market premium (GMP) attained before the shares hit the exchanges. However, once trading commenced, the stock gained traction, reaching ₹774.70 on the NSE, indicating a 3.92% rise from the initial offer price. This shows a remarkable turnaround from the lukewarm pre-listing sentiment.
Institutional Demand and Growth Potential
The demand from institutional investors was robust, with Qualified Institutional Buyers (QIBs) subscribing a whopping 9.09 times the offered shares. Conversely, retail participation was subdued, garnering just 11% interest, revealing a disparity in how different investor segments viewed the IPO's potential.
Backing Hexaware's growth prospects, JM Financial began its coverage with a firm 'Buy' rating and a target price set at ₹820, suggesting a near 10% potential upside. The cornerstone of this optimism lies in the company’s focus on AI-driven digital transformation services, which is seen as a significant area of growth.
The IPO came as an offer-for-sale (OFS) with its principal backer, Carlyle-supported CA Magnum Holdings, reducing its stake from 95% to 74.1%. This trimmed stake doesn't seem to concern the market, especially when the company’s market cap reached ₹43,247 crore at the top-end price band.
Balancing Risks and Competitive Advantage
While there's much excitement about Hexaware’s capabilities and prospects, analysts aren’t blind to the potential risks. They've pointed out challenges linked to its dependence on major clients, like Fannie Mae. Despite this, Hexaware's positioning as a leader in AI solutions offers a robust competitive advantage that could mitigate these risks.
As India's largest IT services IPO to date, Hexaware has not only captured investor attention but also set new benchmarks in the industry. The focus now shifts to how the company will leverage its AI strengths to navigate and grow in this ever-evolving digital landscape. Investors and market watchers alike are keenly observing Hexaware's next moves in the tech world.
