KR Choksey has given Buy recommendation for Mindtree with a target price of Rs. 3800 in its research report issued on Oct 14, 2022
KR Choksey’s research report on Mindtree
Mindtree (MTCL) has shown a stellar performance in Q2FY23, grew by 5.2% QoQ in CC terms, marking 8th consecutive quarter of 5%+ growth and beats our estimate. Dollar Revenue was up 5.8% QoQ to ~USD 422mn. Rupee revenue grew by 8.9% QoQ to INR 34,004mn. Reported operating margin remained flattish by -3bps to 19.1% QoQ due to wage hike impact of 240 bps which was partially offset by the absence of 60 bps one-off merger expense, 50 bps net tailwind from Rupee depreciation/cross-currency movements, 70 bps from operational efficiencies and remaining from lower travel and other expenses. Reported Net profit was up by ~8% QoQ to INR 5,087mn with margin of 15.0%, down 14bps on QoQ basis. The growth in the quarter for Mindtree was broad based and across geographies/services. Deal TCV was at USD 518mn, up 44% YoY, and seems to have benefited from the rise in longer tenure cost optimization deals. We believe that Mindtree can balance out the two mandate (1) cost saving as well as (2) revenue maximization but LTI, its merger partner, is better at handling the cost take-out part.
Outlook
Our target price of INR 3,800 is based on 27.8x Mar-24E EPS over FY22-24E.
More Info
At 17:30 Mindtree was quoting at Rs 3,374.45, up Rs 50.95, or 1.53 percent.
It has touched an intraday high of Rs 3,472.30 and an intraday low of Rs 3,343.80.
It was trading with volumes of 54,402 shares, compared to its thirty day average of 30,397 shares, an increase of 78.97 percent.
In the previous trading session, the share closed down 0.67 percent or Rs 22.25 at Rs 3,323.50.
The share touched its 52-week high Rs 5,059.15 and 52-week low Rs 2,650.00 on 18 November, 2021 and 26 May, 2022, respectively.
Currently, it is trading 33.3 percent below its 52-week high and 27.34 percent above its 52-week low.
Market capitalisation stands at Rs 55,663.45 crore.