Arihant Capital has given Neutral recommendation for Mindtree with a target price of Rs. 4279 in its research report issued on Oct 14, 2021
Arihant Capital’s research report on Mindtree
MindTree has reported strong Q2FY22 numbers, above our estimate on all fronts . Constant Currency Revenue growth +34.1% YoY/12.8% QoQ to (Mn USD) 350.01 against our estimate of 334 (Mn USD). MindTree has reported consolidated revenue of INR 25,862 Mn, +34.3% YoY/12.9% QoQ in Q2FY22 against our estimate of INR 24,845 Mn. Consolidated EBIT stood at INR 4,697 Mn, up by 40.9% YoY/15.6% QoQ against our estimate of INR 4,173 Mn. On the margins front, EBIT margin expansion by 85 bps YoY/ 43bps QoQ to 18.2% against our estimate of 16.8%. Consolidated PAT stood at INR 3,989 Mn, up by 57.2% YoY/16.2% QoQ against our estimate of INR 3,362 Mn. Deal wins remain strong with TCV of $360 mn( up 19℅ yoy). Declared dividend of INR 10/ share.
At CMP of INR 4364, Mindtree is currently trading at FY24 P/E of 38.8x. The company is confident that it will maintain growth momentum in H2 on the back of a robust pipeline and a healthy demand environment, though seasonality might kick in during Q3 with holidays and furloughs. Considering expensive valuations and margin pressure, we value Mindtree at P/E of 38x to its FY24E EPS of INR 112.6 which yields a target price of INR 4,279 per share. We downgraded our rating from Hold to Neutral.