Mindtree plunges 7% as firm guides for weak Q2 revenue on project cancellations

NEW DELHI: Shares of Mindtree slumped 7 per cent in Tuesday’s trade after the IT major lowered its revenue guidance for the second quarter on account of project cancellations, cross-currency movements and slower rampup in a few large clients across different verticals.

In a filing to BSE, the IT firm said it continued to see weakness in its UK-based subsidiary Bluefin. Following the development, the stock plunged 7.04 per cent to hit a low of Rs 511.20

“Margins are going to be lower than planned with a decline in Ebitda margins in Q2 of FY17 compared with that in Q1 of FY17. In the light of its weak revenue outlook, the Bluefin business is expected to report an Ebitda loss for the quarter. Mindtree has implemented a range of operational efficiency improvements and cost control measures. The savings derived from these initiatives may not be sufficient to offset the revenue slowdown in Q2 of FY17,” the company informed BSE.

The company added that uncertainties in the Bluefin business would continue for a couple of months and slower revenue momentum in H1FY17 will delay any likely expansion in Ebitda margins on a year-on-year basis. That said, the company expects annual revenue to grow above NASSCOM’s projected industry average.