Arihant Capital has given Neutral recommendation for MindTree with a target price of Rs. 4153 in its research report issued on Apr 19, 2022

Arihant Capital’s research report on MindTree

MindTree has reported a decent growth: Margin slightly above our estimate due to cost optimization. MindTree during Q4FY22 has reported consolidated revenue of INR 28,974 Mn, +37% YoY/5% QoQ in Q4FY22 was above our estimate of INR 28,476 Mn, higher sequential growth led by seasonal projects especially in Communications, Media, Technology and TTH (Travel, Transportation & Hospitality) and BFSI. Constant Currency Revenue growth +33.2% YoY/4.7% QoQ to $ 384Mn was in-line with our estimate of $384 Mn. Consolidated EBIT stood at INR 5,487 Mn, was up by 40% YoY/4% QoQ was higher than our estimate of INR 5,313 Mn, supported by cost optimization. On the margins front, EBIT margin expansion by 39bpsYoY/ -30QoQ to 18.9% was above our estimate of 18.8%. Consolidated PAT stood at INR 4,731 Mn, was up by 49% YoY/ 8% QoQ higher than our estimate of INR 4,411 Mn.

Outlook

The company remains confident of delivering an EBITDA margin of >20% despite the ongoing supply-side challenges, supported by better margins in new deals. Considering expensive valuations and near term margin pressure, we value Mindtree at a PE of 30x to its FY24E EPS of INR 138.4 which yields a target price of INR 4,153 per share. We maintain our Neutral rating on the stock.

More Info

At 10:48 hrs Mindtree was quoting at Rs 3,895.70, down Rs 65.10, or 1.64 percent.

It has touched an intraday high of Rs 4,080.00 and an intraday low of Rs 3,858.00.

It was trading with volumes of 57,251 shares, compared to its thirty day average of 39,179 shares, an increase of 46.13 percent.

In the previous trading session, the share closed down 3.33 percent or Rs 136.35 at Rs 3,960.80.

The share touched its 52-week high Rs 5,059.15 and 52-week low Rs 1,999.85 on 18 November, 2021 and 19 April, 2021, respectively.

Currently, it is trading 23 percent below its 52-week high and 94.8 percent above its 52-week low.

Market capitalisation stands at Rs 64,214.29 crore.

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