ICICI Direct has given Buy recommendation for MindTree with a target price of Rs. 2390 in its research report issued on Apr 17, 2021
ICICI Direct’s research report on MindTree
MindTree reported a healthy set of Q4FY21 numbers. The company reported dollar revenue growth of 5.2% QoQ in line with our estimate of 5.0% QoQ. EBITDA margin came in at 21.9% (down 119 bps QoQ, mainly led by wage hikes) but was higher than our expectation of 20.5%. The deal pipeline increased 20% QoQ (down 4.6% YoY) to US$375 million. The company added 989 employees in the quarter, with utilisation increasing 120 bps QoQ to 84.3% and offshore effort mix flat QoQ at 82.9%. The company has declared a dividend of Rs 17.5/share.
Ramp up of deal wins, focus on annuity deals, client mining, expansion in Europe, traction in BFSI & travel, robust growth in digital technologies and broad based growth in clients are expected to enable the company to clock industry leading double digit growth in coming years. This, coupled with healthy margin prompt us to maintain our BUY rating with a revised target price of Rs 2390/share (25x P/E on FY23E EPS) (earlier TP was Rs 1970).