Mindtree gains 3% after Q3 show, analysts mixed

Shares of Mindtree gained on Wednesday as traders gave the thumbs up to the IT firm’s December quarter earnings that surprised many on the Street.

Pankaj Kapoor of JM Financial said Mindtree surprised in Q3 with a 276bps QoQ EBIT margin expansion (against estimates of 150 bps), though he added that the 1 per cent constant currency (CC) growth was a tad below its estimates.

“Near-term focus appears to be on driving profitability. Management exuded confidence in sustaining the trend of QoQ margin improvement while it works on calibrating the revenue profile that could keep the revenue growth ranged around the current levels,” Kapoor said.


JM Financial recommended ‘buy’ with target at Rs 980, a potential upside of 13 per cent.

Mindtree on Tuesday reported a 3 per cent year-on-year (YoY) rise in consolidated profit at Rs 197 crore for the quarter ended December 30. The profit figure was up 45.93 per cent on a sequential basis.

Consolidated revenue increased 9.96 per cent on a yearly basis and 2.66 per cent on QoQ to Rs 1,965.30 crore.

HDFC Securities maintained neutral on the stock with a target at Rs 830—a potential downside of 4 per cent. It said the operating performance was in-line with its expectations. Growth was top account heavy and operational improvement is expected to continue, it added.

“While Mindtree has navigated the leadership transition, ‘broad-based’ and sustainable growth profile may take slightly longer as the company undergoes the shift from project-heavy (front-end digital) into longer duration annuity deals. Near term performance will exhibit modest revenue growth versus peers and on improving operating profile,” HDFC Securities said in a post-result note.

The shares of the company closed 2.46 per cent up at Rs 885 on BSE.