>HEXAWARE TECHNOLOGIES LIMITED (MORGAN STANLEY)

Research Tactical Idea

We believe the share price will rise relative to the country index over the next 60 days.

This is because of an earnings release. Hexaware has reported stable revenues of US$53.6m (+1.9% qoq) and strong improvement in operating margins to 18.8% (+650bps qoq, +1891bps yoy). Revenues appear to have stabilized after declining -22% from its peak. We believe current operating margins are sustainable for the company with further room to lower operating costs. Given the earnings visibility, we expect Hexaware to narrow its valuation discount with peers.

We estimate that there is about a 70% to 80% or "very likely" probability for the scenario.

Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the scenario.

Stock Rating: Overweight
Industry View: Cautious