Prabhudas Lilladher has given Buy recommendation for Mindtree with a target price of Rs. 4778 in its research report issued on Apr 19, 2022

Prabhudas Lilladher’s research report on Mindtree

MTCL reported strong revenue growth of 5.2% QoQ CC in-line with our and above cons estimates, led by broad-based growth across most verticals. The company delivered industry leading organic growth of 31% YoY USD in FY22 and is well positioned to lead on growth front in FY23 led by – 1) strong TTM TCV of $1.6 Bn, 16.7% YoY, 2) strong client mining capabilities (doubled $20mn+ accounts from 7 to 14 in FY22, 90% of revenue comes from focused 100 accounts) and 3) strong deal pipeline. Strong headcount addition of 47% YoY in FY22 also indicates strength in demand. EBIT margins were resilient at 18.9%, only 30bps QoQ decline despite supply side cost pressures. Management retained EBITDA margin guidance of 20%+ in FY23 (vs reported EBITDA margin of 21% in FY22) Our EPS estimates remain largely unchanged.

Outlook

Our DCF based TP of Rs. 4,778 (earlier Rs.5157) with implied earnings target multiple of 35x on FY24 EPS (earlier 38x) factors increase in risk free rate to 7.2% (earlier 6.8%) and moderation in terminal growth rate. MTCL is currently trading at 34x/29x on earnings of INR 116/135 for FY23/24 respectively with Revenue/EPS CAGR of 17%/16% for FY22-24E. Maintain ‘Buy’.

More Info

At 11:08 hrs Mindtree was quoting at Rs 3,878.95, down Rs 81.85, or 2.07 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 58,563 shares, compared to its thirty day average of 39,179 shares, an increase of 49.47 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 23.33 percent below its 52-week high and 93.96 percent above its 52-week low.

Market capitalisation stands at Rs 63,938.20 crore.

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