Mindtree (MTCL.IN) - Recovery in growth - Earnings Update - CSEC Research

- In 2QFY18, Mindtree's revenue grew by 3.3% QoQ to INR 13.3bn. In USD terms, revenues grew by 3.0% QoQ to USD 206.2mn. In constant currency terms, revenue grew by 2.1% QoQ. Volume grew by 1.8% QoQ, while realization was up by 0.3% QoQ. Organic revenue growth was 3.5% QoQ.

- Consolidated EBITDA grew by 7.4% QoQ to INR 1,541mn. EBITDA margin improved by 44 bps QoQ to 11.6% led by operational efficiency. PAT margins stood at 9.4% (flat QoQ).

- Amongst geographies, Growth was led by India (+20.2% QoQ) followed by Europe (+11.4% QoQ). Growth in Europe was driven by Bluefin business. The growth in US was flat QoQ owing to decline in Magnus 360 business. Amongst verticals, Travel & Hospitality grew by 4.5% QoQ, followed by CPG, Retail and Manufacturing (+4.0% QoQ). Technology & Media and Services grew by 2.8% QoQ while BFSI grew by 1.8% QoQ. Amongst services, Infrastructure Management services led the growth (+7.0% QOQ) followed by Consulting and package implementation (+5.0% QoQ). Application development & maintenance grew by 1.1% QoQ.

Valuation: Currently, the stock is trading at a P/E 15.8X/14.1X FY18E and FY19E EPS. We assign a target P/E multiple of 14X on FY19E and arrive at a target price of INR 479. We rate the stock MARKETPERFORMER.

Risks: Unfavorable cross currency movement & further delay in deal closures can have a material impact.

Shares of MINDTREE LTD. was last trading in BSE at Rs.475.35 as compared to the previous close of Rs. 487.2. The total number of shares traded during the day was 77197 in over 1144 trades.

The stock hit an intraday high of Rs. 490.3 and intraday low of 473.8. The net turnover during the day was Rs. 37403580.

Source : Equity Bulls

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