MindTree - 4QFY2013 Result Review - Angel Broking

MindTree reported broadly in-line set of results on the revenue front but disappointed on the bottom-line font. MindTree reported USD revenue growth of 2.8% qoq to US$113mn, on the back of 3.7% qoq volume growth. Blended realization declined by 1.4% qoq. In INR terms, revenue came in at Rs. 612cr, up 3.8% qoq. During the quarter, MindTree's EBITDA and EBIT margins declined by 141bp and 138bp qoq to 19.0% and 16.5%, respectively. This was due to factors such as: 1) increase in SG&A expenses, 2) increase in employee costs due to freshers getting added into the system and 3) decline in utilization level. The PAT came in at Rs. 79cr, down 20% qoq, largely led by lower than expected operational performance.

MindTree's Management indicated that it remains hopeful of FY2014 turning out to be a better revenue growth year as compared to FY2013 because of pick up in client spending (backed by a positive survey of its top clients) as well as a result of company's greater concentration on mining its focus clients. Even within the PES segment, the company cited better prospects in FY2014 as against in FY2013.

We continue to be positive on the stock owing to its diversified revenue portfolio and past performance. The target price is currently under review.

Source : Equity Bulls

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