MindTree is the top pick from midcap IT space: IIFL

MUMBAI: IIFL Institutional Equities has upgraded MindTree’s FY13-14 EPS estimates after the company announced its third quarter results. The company remains top pick amongst the midcap IT peers. The brokerage has a target price of Rs 554 on the stock.

“During 3QFY12, IT services registered robust revenue growth of 6.6% QoQ (US$) led by milestone-based revenue from a key client.

Ebitda margin expanded 450bps QoQ, 150bps ahead of our expectation.

Decision making is seeing signs of delay and outlook for the PES business is uncertain. However, we see minimal risk to our estimates that already factor in weak revenue growth over FY13/14 (9% revenue Cagr).

We are upgrading our FY13/14 Eps estimate by 6-9% due to higher margins. Valuations are cheap at 7.5x FY13ii P/E. Mindtree remains our top pick among mid-cap IT stocks,” the report said.