Q3FY21 Result update - MindTree Ltd - ICICI Direct
(Time Zone: Arizona, USA)
MindTree reported healthy set of Q3FY21 numbers and were above our estimates. The company reported dollar revenue growth of 5.0%QoQ above our estimate of 3.8% QoQ. The company registered EBITDA margin of 23.1% (up 286 bps QoQ mainly led by higher utilization and offshoring) and was higher than our expectation of 20.7%. The deal pipeline increased 3.0% QoQ and 50.7% YoY (due to low base last year) to US$312 million. The company added 368 employees in the quarter, its utilization increased by 430 bps QoQ to 83.1% and offshore effort mix increased by 70 bps QoQ to 82.8%.
Valuation & Outlook
MindTree's has seen healthy traction across verticals and clients. Going forward we expect the company to benefit from strong growth in digital technologies, vendor consolidation and multi-year transformation deals. This coupled with healthy margin trajectory bodes well for profit growth. Based on these factors, we maintain our BUY rating with a revised target price of Rs. 1970/share (22x P/E on FY23E EPS) (earlier TP was Rs. 1680).
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