Mindtree - Q4FY22 Result Update - Set to lead on growth front, resilient margins

Ms. Aditi Patil, Research Associate at Prabhudas Lilladher

Quick Pointers:

- Resilient EBIT margin 18.9%, -30bps QoQ in Q4 and EBITDA margin guidance of 20%+ retained for FY23

- TCV of $390 mn, 9% YoY, 4% QoQ in Q4 and $1.6bn, 16.7% YoY in FY23 plus net headcount addition of 47% YoY indicate strong demand momentum.

MTCL reported strong revenue growth of 5.2% QoQ CC in-line with our and above cons estimates, led by broad-based growth across most verticals. The company delivered industry leading organic growth of 31% YoY USD in FY22 and is well positioned to lead on growth front in FY23 led by - 1) strong TTM TCV of $1.6 Bn, 16.7% YoY, 2) strong client mining capabilities (doubled $20mn+ accounts from 7 to 14 in FY22, 90% of revenue comes from focused 100 accounts) and 3) strong deal pipeline. Strong headcount addition of 47% YoY in FY22 also indicates strength in demand. EBIT margins were resilient at 18.9%, only 30bps QoQ decline despite supply side cost pressures. Management retained EBITDA margin guidance of 20%+ in FY23 (vs reported EBITDA margin of 21% in FY22) Our EPS estimates remain largely unchanged. Our DCF based TP of Rs. 4,778 (earlier Rs.5157) with implied earnings target multiple of 35x on FY24 EPS (earlier 38x) factors increase in risk free rate to 7.2% (earlier 6.8%) and moderation in terminal growth rate. MTCL is currently trading at 34x/29x on earnings of INR 116/135 for FY23/24 respectively with Revenue/EPS CAGR of 17%/16% for FY22-24E. Maintain 'Buy'.

Shares of MindTree Limited was last trading in BSE at Rs. 3638.70 as compared to the previous close of Rs. 3960.80. The total number of shares traded during the day was 167819 in over 25031 trades.

The stock hit an intraday high of Rs. 4080.00 and intraday low of 3564.75. The net turnover during the day was Rs. 639443382.00.

Source : Equity Bulls

Keywords

MindTree INE018I01017 PrabhudasLilladher Q4FY22 FY2022 ResultUpdate