CORPORATE ANNOUNCEMENTInformation Technology

Hexaware Technologies Ltd makes a corporate announcement

Hexaware Technologies LtdHEXT

TL;DR

The Rs 9.50 second interim dividend implies a gross cash outflow of approximately Rs 580.47 Crores, using 611,015,992 shares outstanding. Including the earlier Rs 8.50 interim dividend, the FY26 cumulative payout is Rs 18.00 per share, or approximately Rs 1,099.83 Crores.

What is the total cash outflow associated with the ₹9.50 per share dividend, and how does this cumulative payout for FY26 compare to the company's free cash flow generation and historical dividend payout ratios?

The Rs 9.50 second interim dividend implies a gross cash outflow of approximately Rs 580.47 Crores, using 611,015,992 shares outstanding. Including the earlier Rs 8.50 interim dividend, the FY26 cumulative payout is Rs 18.00 per share, or approximately Rs 1,099.83 Crores. The Rs 9.50 dividend was declared on October 20, 2026 [1], while the Rs 8.50 first interim dividend was declared in April 2026 [2].

Cash outflow and free-cash-flow comparison

This indicates that the cumulative FY26 dividend is well covered by the latest reported operating FCF, although it represents a materially higher cash payout than the Rs 699.50 Cr dividend paid during 2025. The 2025 dividend represented approximately 44.51% of 2025 FCF, derived from Rs 699.50 Cr of dividends and Rs 1,571.60 Cr of FCF [3].

Comparison with historical payout ratios

The Rs 18.00 cumulative FY26 dividend is 56.52% above the 2025 annual dividend of Rs 11.50 per share and 105.71% above the 2024 level of Rs 8.75 [4]. Mechanically comparing Rs 18.00 with the latest reported basic EPS of Rs 22.50 produces an 80.00% payout ratio, above the recent 45.20%-53.20% range and slightly above the 75.10% reported in 2022. This is not yet the FY26 payout ratio, because FY26 full-year EPS has not been reported.

Key qualification: the 69.98% figure is a comparison against the latest completed annual FCF, not a reported FY26 FCF payout ratio. The full-year FY26 operating cash flow and capex denominator could not be confirmed for the current dividend period. Also, the FCF measure excludes acquisition payments; 2025 included Rs 745.20 Crores of acquisition-related investing outflow [3].

ItemCalculationAmount
Second interim dividendRs 9.50 × 611,015,992 sharesRs 580.47 Cr [1]
FY26 cumulative dividendRs 8.50 + Rs 9.50 = Rs 18.00 per shareRs 1,099.83 Cr [1] [2]
Latest full-year operating cash flowYear ended Dec. 31, 2025Rs 1,739.10 Cr [3]
Less: PPE and intangible-asset capexYear ended Dec. 31, 2025Rs 167.50 Cr [3]
Derived free cash flowRs 1,739.10 Cr − Rs 167.50 CrRs 1,571.60 Cr [3]
FY26 cumulative dividend as % of latest annual FCFRs 1,099.83 Cr ÷ Rs 1,571.60 Cr69.98%, derived
Annual periodReported dividend payout ratioDividend per share
202551.10% [4]Rs 11.50 [4]
202445.20% [4]Rs 8.75 [4]
202353.20% [4]Rs 8.75 [4]
202275.10% [4]Rs 11.00 [4]
202132.20% [4]Rs 4.00 [4]

With this being the second interim dividend declared for FY26, what is the total dividend per share (DPS) declared for the fiscal year to date, and does this frequency of distribution signal a shift in the company's capital allocation policy?

FY26 DPS declared to date is Rs 18.00 per share, calculated as:

  • First interim dividend: Rs 8.50 per share [5]
  • Second interim dividend: Rs 9.50 per share [1]
  • Cumulative FY26 DPS: Rs 18.00 per share

The frequency does not, by itself, signal a new capital-allocation policy. Hexaware also paid two interim dividends during 2025, totalling Rs 11.50 per share [6]. The clearer change is the higher payout quantum: FY26’s declared DPS is Rs 6.50 higher, or approximately 56.52%, than the prior year’s total, calculated from Rs 18.00 and Rs 11.50.

The appropriate read is therefore continuation of a two-interim-dividend distribution pattern, with a materially larger payout, rather than evidence of a newly adopted policy. A genuine policy shift would require an explicit change to the dividend-distribution framework, a stated payout target, or evidence that interim distributions are replacing another use of cash such as acquisitions or reinvestment. Those signals are not established by the two declarations alone.

How does the dividend yield implied by this ₹9.50 per share payout compare to the payout ratios and dividend yields of comparable mid-cap IT services companies, particularly those with similar cash-conversion cycles?

The Rs 9.50 second interim dividend is sizeable relative to Hexaware’s earnings, but its dividend yield cannot be calculated without Hexaware’s share price. On a mechanical basis, Rs 9.50 equals 42.09% of the latest annual EPS of Rs 22.57; the two FY2026 interim dividends together total Rs 18.00, equivalent to 79.75% of that latest annual EPS. The latter is only a reference calculation because FY2026 earnings corresponding to the current-year dividends are not yet available.

Payout comparison

The calculation is `dividend per share / EPS`. It should not be confused with the 950% of face value stated in Hexaware’s filing, which is not a dividend yield [1].

Cash-conversion lens

The closest disclosed cash-conversion comparison is between Tata Elxsi and KPIT: their FY26 operating cash flow to revenue was 17.70% and 18.50%, respectively [17] [18]. Yet their payout policies differ sharply: Tata Elxsi distributed roughly three-quarters of FY26 EPS, while KPIT distributed about one-third.

Mphasis is less comparable on this axis. Its FY26 operating cash flow to revenue was 7.90% [19], and management discussed a roughly 95-day DSO in Q1 FY27 [20]. KPIT reported a much shorter 49-day DSO in Q2 FY26 [21]. This points to Mphasis having greater working-capital absorption despite its high dividend payout.

Hexaware’s FY25 operating-cash-generated-to-revenue proxy was approximately 12.95%, derived from operating cash generated of 17,391 and revenue of 134,304 [6] [4]. This is below Tata Elxsi and KPIT on the disclosed proxy, although the period and definition are not perfectly aligned.

Implication: Hexaware’s Rs 9.50 installment looks aggressive relative to KPIT’s payout policy and broadly consistent with the higher payout orientation of Tata Elxsi and Mphasis when measured against the latest annual EPS. However, the apparent 79.75% total payout comparison is not yet a same-year payout ratio, and no defensible yield ranking is possible until current share prices for Hexaware, Tata Elxsi and Mphasis are available.

CompanyDividend and EPS basisDerived payout ratioDividend yield
HexawareRs 9.50 second interim dividend [1]; latest annual EPS Rs 22.57 [7]42.09% for the second interim alone; 79.75% if combined with the Rs 8.50 first interim [8]Not confirmed: current Hexaware share price is unavailable
Tata ElxsiRs 75 FY26 final dividend [9]; FY26 EPS Rs 100.88 [10]74.35%Not confirmed: current Tata Elxsi share price is unavailable
MphasisRs 62 FY26 final dividend [11]; FY26 EPS Rs 97.82 [12]63.38%Not confirmed: current Mphasis share price is unavailable
KPIT TechnologiesRs 2.25 interim plus Rs 5.25 final dividend for FY26 [13]; FY26 EPS Rs 23.43 [14]32.01%1.38%, based on Rs 7.50 annual dividend and the Rs 544.70 close on 21 October 2026
Fractal AnalyticsAnnual dividend and FY26 EPS basis could not be confirmed; Q1 FY27 KPI shows EPS Rs 4.31 and a 0.0% payout ratio [15] [16]Not confirmed as an annual ratioNot confirmed
IDream Film InfrastructureDividend and comparable IT-services EPS basis could not be confirmedNot confirmedNot confirmed

Sources

  1. [1]Hexaware Technologies Ltd: Declaration of 2nd Interim Dividend of ₹9.50 per Equity Share — 2026-10-20T21:02:12.460000, p.1
  2. [2]Hexaware Technologies Ltd. Annual Report 2024: Strong Financials, Successful IPO, and AI-First Strategy — 2025-04-07T17:58:32.460000, p.166
  3. [3]Hexaware Technologies Limited Q3 FY26 Consolidated Financial Results (Audited) — 2026-02-04T00:00:00, p.3
  4. [4]Hexaware Technologies Ltd. Annual Report 2025 and 33rd AGM Notice with CY25 Financial Highlights — 2026-04-10T15:39:26.250000, p.56
  5. [5]Hexaware Declares INR 8.50 First Interim Dividend for FY 2026; Updates Stakeholders Committee. — 2026-04-27T14:01:49.050000, p.1
  6. [6]Hexaware Technologies Ltd. Annual Report 2025 and 33rd AGM Notice with CY25 Financial Highlights — 2026-04-10T15:39:26.250000, p.71
  7. [7]TTM Diluted EPS
  8. [8]Hexaware declares ₹8.50 interim dividend for FY2027; appoints director to Stakeholders Committee. — 2026-04-27T14:06:58.973000, p.1
  9. [9]Communication to Shareholders Regarding Tax Deduction at Source (TDS) on Final Dividend for FY 2025-26 — 2026-05-19T19:34:17.600000, p.2
  10. [10]TTM EPS
  11. [11]Mphasis announces strong FY26 and Q4 results, recommends INR 62 dividend, and re-appoints CEO & MD. — 2026-04-29T18:26:03.343000, p.1
  12. [12]TTM EPS
  13. [13]KPIT Technologies Limited Annual Report for FY 2025-26 — 2026-08-05T14:43:23.523000, p.26
  14. [14]TTM EPS
  15. [15]EPS
  16. [16]Dividend Payout Ratio
  17. [17]TTM OCF to Revenue
  18. [18]TTM OCF to Revenue
  19. [19]TTM OCF to Revenue
  20. [20]MphasiS Q1 FY2027 Earnings Call Transcript: Financial Performance and Mphasis Tria Platform Strategy — 2026-07-28T13:30:28, p.7
  21. [21]KPIT Technologies Q2 FY2026 Investor Update: Financial Performance, Strategic Engagements, and Outlook — 2025-11-10T08:17:15.660000, p.9

Keep digging

What is the total cash outflow associated with the ₹9.50 per share dividend, and how does this cumulative payout for FY26 compare to the company's free cash flow generation and historical dividend payout ratios?

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