Buy Hexaware Technologies Ltd for the Target Rs720 by Motilal Oswal Financial Services Ltd
Key takeaways from HEXT Investor day Zero license and tokenomics are the two most interesting threads
We attended Hexaware (HEXT)’s Investor Day. The company's AI strategy has two legs: a ‘Zero Friction Enterprise’ framework built on six Zero pillars, and ‘AI for Business’ – solving previously unsolvable problems and entering adjacent markets. The company highlighted that >50% of its revenue is now AI-infused – we view this as an encouraging disclosure, but remain more focused on how Hexaware builds bottom-up differentiation within that AI revenue. Of the six pillars, Zero License (replacing client SaaS spend with AI-native capabilities owned by Hexaware) and tokenomics stood out as the most interesting and differentiated themes. On pricing, Hexaware is testing eight commercial models built around token costs (refer to our report dated 10th Aug, 2026: Hexaware Technologies: Well set-up for the medium term) – including fixed-cost and gain-share structures – with every new proposal now carrying a token-based option. We reiterate our BUY rating with a TP of INR720 (based on 25x CY27E EPS).
Zero License: differentiated, but still early; how this scales remains key
* Zero License aims to replace recurring SaaS license costs by rebuilding client workflows and IP on the client's own cloud using AI, allowing enterprises to own rather than pay recurring software rent.
* The opportunity has expanded beyond low-code platforms into managed services, customer relationship management (CRM) and embedded vertical platforms. The company also indicated that no comparable offering has emerged from peers over the past eight months.
* Around 40% of a CIO's technology budget still goes toward software licenses, deployment, and maintenance (‘angry budget’), while Gartner estimates nearly USD234b of enterprise software spending could be at risk over time.
* We believe the most addressable opportunities are likely to be low-code/ nocode platforms, SaaS bolt-ons, platform lock-ins, and legacy licensing structures where AI-native alternatives can deliver a better cost proposition.
* We believe HEXT is offering something genuinely differentiated here and will track deal wins/revenue conversion as the key monitorable. The February-era - ‘all SaaS is worthless’ - narrative has ebbed, but per-seat SaaS replacement in these pockets remains a credible, long-term opportunity.
Infra/AMS: Tokenomics enter the ops layer
* Traditional automation has typically plateaued at around 30-40% ticket automation. Through its Zero Tickets framework, the company is targeting autonomous resolution well beyond this level.
* One case study highlighted a USD9b revenue EPC and energy client where ticket volumes declined to one-third, average resolution time reduced notably from 3.5 hours to 10 minutes, and delivery headcount fell by 60%. The productivity gains were shared with the client through a 22% reduction in contract pricing.
* Despite the pricing give-back, the client awarded two additional statements of work covering network and security services, resulting in 21% higher revenue on the account. We believe this ‘give-back-pricing, win-more-scope’ approach will be an important model to monitor as AI adoption improves.
* The next renewal cycle represents a sizeable opportunity, with industry-wide infrastructure renewals estimated at nearly USD342b.
* AI agent operations are also creating a new layer of managed services around onboarding, monitoring, and governance of AI agents. Over time, token management could increasingly replace traditional cloud-cost frameworks as a new area of infrastructure spending.
Valuation and view
* Although HEXT has lowered its CY26 revenue guidance, management commentary suggests that growth is largely being deferred rather than lost. Delayed deal ramp-ups, continued momentum in modernization programs, and healthy growth across banking, healthcare, and manufacturing should support a stronger exit in CY26 and provide a better starting point for CY27.
* We estimate a CC revenue growth of 6.4%/9.7% YoY for CY26/CY27, supported by improving execution, continued large-account mining, and healthy AI-led opportunities. The company also maintained its margin guidance despite continued investments in AI and talent. We reiterate our BUY rating with a TP of INR720 (based on 25x CY27E EPS), implying 35% potential upside.
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