Hexaware Slashes Revenue Outlook, Shares Drop 8%; Margins Held Steady

Hexaware Cuts CY26 Revenue Growth Guidance to 6-7%

Hexaware Technologies shares tumbled as much as 8% on Thursday after the IT services company lowered its calendar-year 2026 revenue growth outlook. The firm now expects constant-currency revenue to expand by 6-7%, down from its prior forecast of at least 7.6%. Management attributed the cut to delays in ramping up new deals and a softening macroeconomic environment.

The second-quarter numbers themselves were broadly in line with expectations. Revenue rose 4.4% sequentially and 6.1% year-on-year on a constant-currency basis. Operating margin, as measured by EBIT, improved to 13.6% from 13% in the previous quarter, though net profit slipped 6.1% sequentially to ₹330.2 crore from ₹351.6 crore.

Despite trimming the top-line target, Hexaware reaffirmed its EBIT margin guidance of 13-14% for CY26. The revised revenue forecast includes a 50-basis-point contribution from the CP rebadging deal and implies a 2.7% compound quarterly growth rate at the midpoint, which management said it is confident of achieving.

On the deal front, the company reported another quarter of strong order momentum. Wins spanned consolidation, outsourcing and digital transformation projects. Hexaware noted increased traction in legacy modernisation deals worth over $10 million, secured a consolidation engagement with another top-15 client, and signed its first two mandates in a new category where enterprises are choosing long-term AI partners. Its early-stage Zero License offering also won several deals and is expected to scale as proofs of value convert to enterprise-wide rollouts.

Behind Hexaware's Guidance Cut: Deal Delays and Margin Resilience

Why Hexaware Trimmed Its Revenue Outlook

The guidance downgrade reflects a collision of company-specific and macro factors. Management explicitly pointed to delays in the ramp-up of large contracts, which suggests that the execution timeline for recently won deals has slipped. At the same time, a weakening global economy is making clients more cautious, slowing decision-making on discretionary IT spend. The net effect is that the “path to achieving its earlier revenue target has narrowed,” as management acknowledged.

For a mid-tier IT firm like Hexaware, a 70–110 basis-point cut to full-year growth forecasts is meaningful. It signals that recent deal wins – while promising – may not translate into revenue as quickly as the company had previously assumed. This could test investor patience, especially if the same headwinds persist into the second half of the year.

Where Hexaware Is Holding Its Ground

Margin discipline stands out. Even as top-line expectations were reset, Hexaware reiterated its 13-14% EBIT margin band. The Q2 margin of 13.6% already sits comfortably within that corridor, and the company’s confidence in defending it suggests it has levers to manage costs and improve utilisation, even if revenue growth softens further.

The deal pipeline offers a counterbalance to the guidance disappointment. A consolidation deal with another top-15 client and the first wins in the “long-term AI partner” category underline that Hexaware is still capturing strategic relationships. Management believes these AI mandates, though small today, have significant expansion potential. Meanwhile, multiple wins in the Zero License offering – an asset-light, cost-savings play for clients – indicate the company is positioning itself for the next wave of demand around cloud-native and open-source solutions.

A Mixed Vertical Outlook

Hexaware’s growth in CY26 is expected to be driven by Healthcare & Insurance, Banking, and Manufacturing & Consumer verticals. The Professional Services and Financial Services segments are likely to follow, while the Travel & Transportation vertical is projected to remain under pressure as macro weakness weighs on travel-related IT budgets. This fragmented demand picture means the company will need to execute sharply in its strongest verticals to offset drag from others.

What Hexaware's Guidance Reset Means for Investors and Clients

• With Q2 EBIT margin at 13.6% and the full-year band held at 13-14%, management’s margin narrative appears credible; however, investors should monitor whether deal delays eventually force cost pressures – particularly through higher onshore hiring or lower utilisation – that could squeeze profitability later in the year.
• The revised 6-7% revenue guidance implies a 2.7% compound quarterly growth rate at the midpoint; Hexaware’s ability to deliver sequential growth close to that pace over the next three quarters will be a critical gauge of whether the reset is realistic or whether further downward adjustments are likely.
• Hexaware signed two mandates in the new AI partner category and multiple Zero License wins; while these are early-stage, clients should note that the company is building a beachhead in higher-profile, strategic deals, which could deepen its engagement with large accounts if the initial projects deliver tangible outcomes.
• Healthcare & Insurance, Banking, and Manufacturing & Consumer are flagged as growth drivers; conversely, Travel & Transportation is expected to remain weak. Investors and clients can use this vertical map to assess where Hexaware’s revenue visibility is strongest and where exposure is most vulnerable.