Prabhudas Lilladher has given Buy recommendation for Mindtree with a target price of Rs. 2567 in its research report issued on Apr 19, 2021
Prabhudas Lilladher’s research report on Mindtree
MTCL reported strong beat in revenue growth, +5.2% QoQ $ (PLe: 4.7%, Cons:4%) driven by strong recovery in Travel (+17% QoQ $) and strong demand momentum in RCM (+9% QoQ $) and CMT (+4.1% QoQ $). Growth extravel (most affected vertical by the pandemic) of 8.2% YoY in FY21 is commendable and reflects their broad-based capabilities and agility to turn around faster. MTCL is experiencing strong traction in Healthcare vertical and they will start reporting revenues in this vertical from 1QFY22. They reported strong sequential growth in deal win TCV of $375mn, +20% QoQ, -5% YoY. We believe MTCL can achieve industry leading growth in FY22 given i) ability to drive strong broad-based growth ex-travel ii) Healthy FY21 order book of $1.38 bn +12% YoY iii) Strong deal win momentum anticipated for FY22 and iv) material addition of revenues from healthcare vertical, v) Pick up in BFSI vertical.
We value MTCL on 24X (20% discount to LTI) multiple for FY23 earnings of INR 107 to arrive at a changed TP of INR 2567 (earlier: 2326). MTCL is currently trading at 24/19.3X earnings of INR 86.1/ 107 for FY22/23 respectively with EPS CAGR of 26% for FY21-23E.