Mindtree - 4QFY13 Result Update - Nirmal Bang

- Mindtree's 4QFY13 US dollar revenue grew 2.8% QoQ at US$113mn, in line with our estimate of US$113.3mn.

- Volume growth was healthy at 3.7% QoQ, while blended pricing dipped 1.4% QoQ. IT services (ITS) grew 3% QoQ, while product engineering services (PES) grew 2.3% QoQ.

- Rupee revenue grew 3.8% QoQ to Rs6.12bn, in line with expectations.

- Margins, however, declined 138bps QoQ on higher employee costs, lower utilization and billing rates. This, along with forex losses of Rs153mn (Rs142mn loss in 3QFY13), led net profit to decline 20.1% QoQ to Rs789mn (12.4%/3% below our/consensus estimates, respectively).

- We cut our FY14E/FY15E EPS by 5%/2.2%, respectively and roll over our target multiple to FY15E EPS. Consequently, we have upgraded the stock to Hold from Sell with a revised target price of Rs889 (Rs805 earlier), implying a PE of 9x FY15E EPS.

Source : Equity Bulls

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