Morgan Stanley gave the stock an equal-weight rating, stating that a volatile macro environment obscured a strong execution.
Strong H1 outlook and reiteration 20 percent-plus Ebitda margins are key positives. The foreign brokerage added that this is due to the volatile macro environment, which creates uncertainty about future demand prospects. The brokerage set a target of Rs 4,450 per scrip.
UBS maintained a sell’ even though Mindtree was giving a beat on revenue and margins, as well as strong TCV wins. It set a target of Rs 2.700.
The scrip declined 3.29 percent to Rs 2.804.05 on BSE. Year-to-date, the scrip fell 42 percent.
The IT giant reported a 37.3 percent year-on-year increase in profit after taxes (PAT) to Rs 471.60 crore, compared to Rs 343.40 crore in last year’s same quarter. The quarter’s revenue rose by 36.2 percent YoY to Rs 3.121.10 crore, compared with Rs 2.291.70 crore in last year’s corresponding quarter. In dollars, revenue reached $399.3million. This is an increase of 4 per cent and 28.6 percentage YoY. In constant currency terms, revenue was up 5.5% sequentially.
The quarter’s Ebit margin came in at 19.2 percent, compared to 18.9% in March quarter and 17.7% in June quarter last year.
YES Securities, with a target of Rs 3.432 on the stock said that the IT major should improve its employing pyramid, positive operation leverage and efficiency measures to keep a broad 20% plus Ebitda margin.
“Attrition is still high, but it is expected to decrease over the next few month.” It may be able to use its client mining strategy of cross-selling with top clients and upselling, which could serve it well,” the company said. The stock was valued at 27 times FY24 EPS.
Management noted that it does not see any change in client behavior, although there were a few client-specific issues within the CPG vertical which have had an impact on performance in both 4QFY22 (and 1QFY23).
“The company remains confident of sustaining ‘about 20 per cent’ Ebitda margins and reiterated commitment to add 30 per cent more freshers in FY23. We slightly increased FY23E EEPS, but we adjusted growth assumptions for FY24 & FY25 to account for increasing macro concerns. We also adjust our target multiple for the ‘merged LTI-Mindtree’ entity to 25 times from 27 times earlier in line with historical 10 per cent average discount to
It stated, “We are sorry,” and suggested a target of Rs 3290 for the stock.
ICICIdirect expressed its admiration for Mindtree’s consistent and well-executed approach to profitability. The stock is valued at 23 times FY24EEPS of Rs.126, to reach a target of Rs 2,969.
Kotak Institutional Equities reported that deal wins were solid in Q1 and had a record-breaking TCV of $570 millions. Kotak said that they are confident in maintaining their revenue growth momentum through Q2, and that H2 will be a challenging year due to macro uncertainties, and the difficulty of predicting clients’ spending habits.
“We modified EPS estimates, taking into account Q1 performance. Kotak stated that Buy was maintained with a TP at Rs 3.400 at 25 times June 24-E EPS. This is based on strong execution, margin defense and the potential benefits of merger synergies from LTI in medium-term.”
(Disclaimer – The opinions, recommendations, views and suggestions of the experts are theirs. These views do not reflect those of Economic Times.