Yet another profit warning – twice in the last three quarters : MindTree (MTCL) management recently announced that it expects Q2FY17 revenue to be lower than Q1FY17, due to CC impact, project cancellations, slower ramp-ups in a few large clients and continued weakness in Bluefin. Q2 Margins, which already had salary hike as headwind, will be further impacted due to lower revenues – Bluefin is expected to report EBITDA loss. H2 margins are expected to be better than H1, and the management still expects to beat industry growth in FY17. Bluefin is expected to remain weak due to persistent weakness in EU.

Valuation: Phillip Capital have cut FY17/18 earnings estimates by 9%/6%, on the profit warning. They continue to value MTCL at 14x FY18 EPS (at par with HCL, highest in our mid-cap universe). Their price target of Rs 560 (earlier Rs 600) offers limited upside from current levels. But with the strongest growth profile in the industry and the sharp correction post profit warning, we don’t expect much downside either. We maintain NEUTRAL.