14 Jul , 2022 By : Kanchan Joshi
IT company Mindtree on Wednesday posted a 37% rise in net profit at Rs471.6 crore for the three months ended on June 30, 2022, driven by improved operational efficiencies, increased utilization and revenue growth, as compared to Rs343 crore in the same quarter last year. Shares of Mindtree plunged more than 3% to Rs2,812 apiece on the BSE in Thursday's opening deals.
Mindtree's revenue from operations surged to Rs3,121 crore in Q1FY23 as compared to Rs2,291.7 crore in the corresponding period of the last year, posting year-on-year (YoY) growth of 36%.
“Mindtree's 1Q results beat our estimates led by strong margin delivery on the back of lower employee costs. Deal wins at US$570m were at an all-time high and management reiterated strong demand for 1HFY23. However, RCM vertical remained subdued with signs of slowdown in spends," said analysts at Jefferies in a note.
While they have raise their estimates by up to 5%, the brokerage house remains wary of Mindtree's exposure to short-cycle deals, high client concentration and merger-related risks. It has maintained underperform rating on Mindtree shares with a target price of Rs2,490.
Mindtree’s dollar revenue stood at $399.3 million, up 5.5% sequentially in constant currency, making it the sixth consecutive quarter of 5%-plus revenue growth in constant currency. The total contract value of deals stood at an all-time high of $570 million.
“Mindtree reported another set of strong results. It was driven by its strong BFSI and travel segments – perfectly in-line with our hypotheses of recovery in travel segment. Top client continued to report strong growth, while retail vertical was impacted by client specific issues," said PhillipCapital.
The Bengaluru-based IT service provider's margins at 19.2%, sprang a big positive surprise is a remarkable feat in this environment with supply side challenges. Mindtree margins have surprised investors across the board – something that the brokerage said has been advocating for over two years. PhillipCapital has maintained Buy on the IT stock with a target price of Rs4,300.
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