Shares of Bengaluru-based IT services firm Mindtree hit new highs on Thursday, after the company reported strong results for the quarter ended September 2021.
As of 3pm, Mindtree was trading at 4,675.30, up 312.05 or 7.15%. It recorded a new 52 week high of 4,937.15. The action opened at 4,590 against the previous close of 4,363.25. It recorded an intraday low of 4,550.00.
On the NSE, it was trading at 4,679.95, up 316.10 or 7.24%. It recorded a 52-week high of 4,937.65.
Mindtree reported net profit of 398.9 crore, an increase of 57.2% year-over-year on widespread growth momentum. On a sequential basis, it increased 16.2 percent.
Revenue increased 34.3% to 2,586.2 crore year over year and 12.9% quarter over quarter. Debashis Chatterjee, CEO and Managing Director of Mindtree, said annual dollar revenue for the quarter was the highest in a decade.
Revenue in dollars was $ 350.1 million, representing sequential growth of 12.7% and 34.1% year-on-year. Net profit was $ 54 million, growing 16% and 57.3% year-on-year. The Bengaluru-based IT services company has approved an interim dividend of 10 per share. Its attrition rate was 17.7 percent.
Mixed views of brokerage firms
The brokerage firms were largely neutral on the stock, seeing a limited rise going forward.
Motilal Oswal Research rated the stock “neutral” with a target price of 4,460, up 2%.
“Management’s increased focus on annuity income and strategic accounts is reflected in its revenues and client mix. A strong outlook for strategic accounts, decent contract signatures and the ability to maintain an improved margin are key positives, ”he said in a note.
“The stock is currently trading at 37x EPS FY23E. It has been one of the top performers in the IT industry over the past year, with returns of 175%. The major positives have already been captured and we are seeing a limited potential thereafter, ”he added.
Emkay maintained a “sell” rating on the stock with a revised price target of 3,300 to 30x September 23E EPS (previously 3,070), given high valuations and anticipated pressure on margins.
HDFC Securities, however, was bullish on the stock, giving it an “Add” rating at a target price of 4,400.
“The company remains confident to deliver an EBITDA margin above 20% despite persistent challenges on the supply side, supported by better margins in new transactions, increased offshoring and better utilization,” he said. he stated in a note.
To deal with growing attrition (+400 basis points), the company will continue to hire new ones, focus on retraining existing employees and relying on outsourcing for niche talent. We are increasing the revenue / EPS estimate by 6/10% for fiscal years 23 / 24E to account for higher growth. Our price target of 4,400 yen is based on an EPS of 35x on December 23 (23% CAGR in FY21-24E on a high basis of over 70% for FY21) “, a- he declared.
- Mindtree posts a 57.2% net jump in the second quarter to ₹ 399 cr
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