Retain 'buy' on MindTree – TP Rs.750 - Geojit BNP Paribas

- The stock is currently traded in the range of Rs.678.

- 2QFY13 USD revenue growth of 1.7% q-q is in line with expectations, but EBIT and PAT are ahead of the street and consensus estimates.

- EBIT margin expanded 146bp q-q on an improving employee mix, utilizations, FX and lower SG&A, which offset wage hikes and rebranding costs.

- Lower taxes offset higher than expected FX losses.

- Company now expects lower USD revenue growth than NASSCOM's FY13 11-14% industry estimate.

- The management is confident of a better 2H on a recovering product engineering segment and verbal confirmation on a large deal.

- MindTree remains a margin story based on focusing on strategic clients, and operational improvements. Management sees 3Q flat qoq margins for 3Q on a constant currency (CC) basis.

- Any sharp appreciation of the rupee is the key risk to the target price.

Source : Equity Bulls

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