MindTree Ltd. share price target

Background: Mindtree is a global technology consulting and services company, helping enterprises marry scale with agility to achieve competitive advantage. Born digital, in 1999 and now a Larsen & Toubro Group Company, Mindtree applies its deep domain knowledge to 290+ enterprise client engagements to break down silos, make sense of digital complexity and bring new initiatives to market faster. We enable IT to move at the speed of business, leveraging emerging technologies and the efficiencies of Continuous Delivery to spur business innovation. Operating in more than 15 countries across the world, we're consistently regarded as one of...

We maintain our Reduce rating as we consider stock valuations expensive against the downturn of discretionary spends & top client concentration (30% of revenues). Our EPS estimates are upgraded on account on better margin performance, change in deprecation policy & higher other income. We value MTCL at 14X Sep-22 EPS of Rs. 63.5 to arrive at changed TP of Rs.888. MTCL is trading at 16X/15X FY22/23E earnings of Rs.61/66 respectively. Mindtree reported revenue de-growth of 9.1% in QoQ vs our estimates of 7.1% CC decline. Volumes were up 4% YoY. Pricing was down 5.2% YoY, mainly...

Mindtree reported revenue (USD)/Adj. EBIT/PAT growth of -4%/75%/130% The company reported yet another quarter of strong performance from the top account (Microsoft, +10% QoQ and +44% YoY). The share of revenue from fixed-price projects saw a material increase (~830bp QoQ to ~67% of revenue), largely reflecting the strategic focus on Tight control on cost more than offset the margin impact from a drop in the revenue run-rate. Increasing client concentration and potential insolvencies in some airlines / hospitality companies on account of the COVID-19 disruption are key risks to Additionally, it now has decent exposure to annuity-/project-based work in the Mindtree reported revenue (USD)/Adj. EBIT/PAT growth of -4%/75%/130% YoY. BFSI and Retail The share of revenue from fixed-price projects saw a material increase (~830bp QoQ to ~67% of revenue), largely reflecting the strategic focus on chasing long- Cash conversion was healthy during the quarter.

Mindtree has informed the stock exchanges that it expects high single-digit revenue decline (USD, QoQ) in 1QFY21, driven by near-term headwinds in the Travel and Hospitality vertical (TTH, ~16% of sales). While the update is procedural best practice, we have factored in sequential decline of similar Mindtree has further highlighted that it is currently witnessing high demand in Communications, Media and Technology (CMT) and CPG verticals. The company expects sequential growth in 2QFY21 and top line recovery in 2HFY21. It foresees demand for Digital and Transformational services as clients invest in data, cloud- enabled solutions, customer centric and end-user Despite near-term growth challenges, Mindtree expects margins to remain stable in 1QFY21 at 4QFY20 levels. salary hike deferral, optimization in sub-contractor and discretionary expenses) seem to have driven this margin stability notwithstanding the expected revenue decline. The stock is currently trading at 18x on depressed FY21E EPS.

Mindtree Ltd is an international information technology consulting and implementation company that delivers business solutions through global software development. It is virtually a debt free company and has been maintaining a healthy average dividend payout of 30%.It delivered an RoE of 25.1% and is trading at valuation PE 23.6x of TTM earnings. Hence BUY.

Upbeat quarter; upgrade a notch to REDUCE

The company did not witness the impact of Covid-19 in Q4FY20. We believe this is the primary reason for its stellar performance in the quarter. MindTree has improved its margins significantly in the quarter and brought it well...

Mindtree reported revenue growth of 1.9% in c/c and 1.2% in reported terms, in line with our expectations. Growth was driven by the top account which grew 8.6% sequentially. Ex-top account revenues would have declined 1.1% QoQ. Its top client added US$5.5 mn to incremental revenues offsetting US$2.3 mn decline in the rest of the firm. EBIT margin was in line with our estimates of 12.5%. Active clients have shown a decline to 307 from 320 in Q3FY20 & 343 in Q2FY20, this highlights rationalization of tail accounts. We give credit to the new management on margin expansion, but we find...

Mindtree (MTCL) reported an upbeat Q4 operating performance with 1.9% QoQ CC growth and swift margin recovery.

The spread of Covid-19 has led to lockdowns in many countries globally and could have adverse economic implications. In addition, the recent fall in crude prices could also have an adverse impact of fiscal health of oil producing countries. As a result, IT companies, which have considerable exposure to verticals such as oil, energy & utilities; banking & capital markets; manufacturing and travel & transport could see an adverse impact from the ongoing crisis. Companies like Wipro, Infosys in large cap and MindTree, NIIT Tech, Sonata software, Cyient, Accelya Solutions among...