Mindtree has reported an 8.2 percent sequentially growth in profit in the June 2021 quarter with the highest ever order book of over $ 500 million
Mindtree | The stock has surged 103 percent in 2020 to Rs 1621.75 as of December 29, 2020 from 800.15 on December 31, 2019.
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Mindtree share price jumped more than 4 percent in the opening trade on July 14, a day after the midcap IT services company reported an 8.2 percent sequentially growth in profit in the June 2021 quarter with the highest ever order book of over $ 500 million.
The company’s net profit increased to Rs 343.4 crore in Q1FY22 from Rs 317.3 crore in the previous quarter. The year-on-year growth in the bottom line was 61.2 percent.
Revenue increased 8.6 percent sequentially to Rs 2,291.7 crore in the June quarter. In dollar terms, revenue was up 7.7 percent to $ 310.5 million during the same period. The year-on-year growth in revenue was at 20.1 percent in rupee terms and 22.6 percent in dollar terms.
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At the operating level, Mindtree reported a 3.8 percent quarter-on-quarter growth in earnings before interest and tax (EBIT) at Rs 406.3 crore but EBIT margin declined 90 bps QoQ to 17.7 percent in Q1FY22.
The company had 260 active clients as of June 2021. “We added three clients in $ 5 million+ band, five clients in $ 10 million+ category and one client in $ 20 million+ band,” the company said in its BSE filing.
The stock was trading at Rs 2,600.90, up Rs 106.15, or 4.25 percent. It touched an intraday high of Rs 2,637.45 and an intraday low of Rs 2,564.95.
Here is what brokerages have to say about the stock and the company post Q1 earnings:
Citi | Rating: Sell | Target raised to Rs 2,215
The company reported good Q1, revenue was ahead, EBITDA was in line and there were healthy bookings. However, cash-flow generation was weak. Citi has revised estimates by 2-3 percent and raised multiple to 27x. “Client concentration and risk to margins are the key. Valuations appear rich at current levels,” it said.
Goldman Sachs | Rating: Buy | Target: Rs 2,863
The global brokerage is of the view that the company posted strong dollar revenue growth of 7.7 percent led by broad-based growth across verticals. Its order book is the highest ever. It expects 20.5 percent constant currency revenue growth for the company in FY22.
Morgan Stanley | Rating: Overweight | Target: Rs 2,800
The brokerage firm believes the company’s revenue growth and margin were stronger than expected. A broadening growth profile and improving revenue visibility augur well. High multiples and limited EPS estimate upgrades limit absolute upside, the firm added.
Motilal Oswal | Rating: Neutral | Target: Rs 2,620
Since July 2019, after the disruption due to the ownership change, MTCL has taken steps to stabilise its client and employee count. The management’s increased focus on annuity revenue and tail account rationalisation is already reflected in revenue and client mix.
A stable outlook for the top account, decent deal signings, and the ability to sustain improved margin are key positives.
The stock is trading at 25x FY23E EPS. It has been one of the best performers in the IT sector in the last one year, with returns of 155 percent. The key positives are already captured, and we see limited upside hereafter. Our target of Rs 2,620 per share implies 26x FY23E EPS. We maintain our neutral rating on the stock.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
