Buy MindTree - Target Price Rs. 930 - Prabhudas Lilladher

Focus on large deals persists: The company continues to pin their hopes on large deal pipeline. According to the management, there are eight large deals in the pipeline. The company bagged two large deals among six last quarter. However, the scope of those deals was reduced considerably. But, they are confident of mining those clients as the engagements are more entrenched.

Four pillars of optimism: The company was confident of stronger FY14 compared to FY13. 1) The management commentary was optimistic on improving deal pipeline. 2) PES is likely to deliver growth as the tailtrimming comes to an end. The management expects momentum in IT Services and PES. 3) The company has identified top 50 clients, out of which, top 24 are key accounts, wherein five are platinum, 14 are Category A and remaining Category B. The company has put-in dedicated account managers to mine those clients by expanding number of engagement with those clients. 4) Discussion with top 50 clients has been encouraging as clients look to ramp-up discretionary spend.

Valuation & Recommendation; BUY - Target Price Rs930: We expect improving demand scenario to give stronger growth leverage to MindTree as it had already made strategic investment in the business. Retain "BUY".

Source : Equity Bulls

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