Hold MindTree, target price Rs 3425: ICICI Direct

ICICI Direct has hold call on MindTree with a target price of Rs 3425. The current market price of MindTree Ltd. is Rs 3310.05. Time period given by analyst is one year when MindTree Ltd. price can reach defined target.

MindTree Ltd., incorporated in the year 1999, is a Mid Cap company (having a market cap of Rs 55711.38 Crore) operating in IT Software sector.

MindTree Ltd. key Products/Revenue Segments include Software Development Charges for the year ending 31-Mar-2022.



Financials
For the quarter ended 30-09-2022, the company reported a Consolidated Total Income of Rs 3449.00 Crore, up 9.12 % from last quarter Total Income of Rs 3160.60 Crore and up 29.61 % from last year same quarter Total Income of Rs 2661.00 Crore. Company reported net profit after tax of Rs 508.70 Crore in latest quarter.

Investment Rationale
The brokerage raises valuation multiple to 25x (5-year average) from 23x driven by: 1) smooth progress in the integration process, and 2) MTCL being the singular IT company able to sustain margins way above pre-covid levels. It arrives at a target price of Rs3,425 valuing the stock on FY24E EPS of Rs137. MTCL is trading at 27x /24.2x on FY23E / FY24E EPS of Rs123 / Rs137. Valuations are fair post massive correction in past 6 months’. Maintain HOLD.

Promoter/FII Holdings
Promoters held 60.99 per cent stake in the company as of 30-Jun-2022, while FIIs owned 11.69 per cent, DIIs 12.07 per cent.