Shares of Hexaware Technologies declined almost 5 percent on Thursday after the company reported its March quarter earnings and suspended its guidance that was provided earlier for FY20.

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The stock fell 4.91 percent to hit an intraday low of Rs 281.40 on the BSE. At 11:20 am, the shares were trading 4.34 percent lower at Rs 283.10 apiece.

On Wednesday, Hexaware reported a sequential decline of 1.7 percent in dollar revenue to $210.6 million while revenue degrowth in constant currency was at 1.1 percent QoQ. In rupee terms, revenue from operations grew by 0.8 percent on quarter to Rs 1,541.75 crore.

Consolidated net profit of the company rose 4.7 percent to Rs 174.96 crore as against the Rs 167.8 crore in the previous quarter, driven by forex gains. Forex gains for the quarter were at Rs 43.41 crore against Rs 0.38 crore in the December quarter.

The company follows the calendar year (January-December) as its financial year.

"The future quarters would be a period of uncertainties and opportunities. We believe our strategic themes and strong balance-sheet position us well to partner with our stakeholders to come out of this crisis stronger," CFO Vikash Kumar Jain said.

Morgan Stanley has maintained 'equal-weight' rating on the stock and raised the target to Rs 275 from Rs 250 per share.

The brokerage said that the company sees an opportunity to gain a market share and expected longer-term revenue growth, better than some of its peers. The margin weakness could continue in the near term, Morgan Stanley said.

“We see limited catalysts in the near term and trim CY20 EPS estimate 4.8 percent, but largely maintain C21/C22 EPS estimate,” the brokerage added.

Motilal Oswal has downgraded EPS estimates over FY21–22E by 13–15 percent. The brokerage has maintained a 'neutral' rating with a target of Rs 306.

“Relatively weaker commentary (v/s that of peers) and the possibility of a further downside in certain key accounts may keep multiples under check. Additionally, a heavier balance sheet and the overhang around an impending stake sale by Barings should further weigh on multiples,” Motilal Oswal said.

Kotak Institutional Equities maintained its estimate of 4 percent revenue decline for the company in CY2020 and a target price of Rs 260.

“Hexaware reported a weak quarter as the impact of Covid-19 at 2-3 percent on revenues was far higher than our estimate. On expected lines, the company has suspended guidance for CY2020E. Hexaware’s belief of net beneficiary in the vendor consolidation exercise will be tested in the current recessionary environment,” Kotak Institutional Equities said in a note.

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