MindTree delivered to market expectations on its key financials as well as by reporting growth across its important segments of operation.

Marginal growth in pricing, expansion in revenues from the US and Europe, reasonable client additions were noteworthy points during the June quarter.

While top IT players such as TCS and Infosys witnessed a decline in realisations,

MindTree managed a marginal growth, which suggests that the company may not be facing significant pricing pressure.

The main sore points were an uncomfortably high attrition rate and low volume growth.

During the quarter, while revenues were up 0.2 per cent sequentially in dollar terms, net profits soared 21.3 per cent. In rupee terms, revenues were up 7.1 per cent, while net profits rose 28.6 per cent.

Forging ahead

MindTree managed just a 0.2 per cent sequential growth in volumes, lower than both Infosys and TCS.

But there has been a marginal increase in pricing (0.4 per cent), when its larger-sized peers had to contend with falling(1-3.7 per cent) realisations.

Also, volume growth has been healthy in onsite locations, which means that there is sufficient client traction.

All its key verticals of operation – BFSI, travel, media & services and manufacturing & retail, grew (1.9-4.2 per cent in dollar terms) at a pace faster than the overall company’s revenue rate.

Revenues from the US and Europe too rose at a pace quicker.

Application development and maintenance services expanded.

The above factors collectively suggest that though MindTree is experiencing broad-based growth, customers may still be going slow on discretionary spends.

Client addition

Client addition has been healthy, with 19 customers being added during the quarter.

One client each have been added in the $1 million and $10 million categories.

Revenues from top clients rose, suggesting reasonable client-mining.

Attrition though is still uncomfortably high at 17.1 per cent, among the highest in the industry.

Trade body Nasscom has projected a revenue growth rate of 11-14 per cent for the IT industry.

Despite the slow start, MindTree is confident of meeting the industry body’s growth rate guidance.

ven@thehindu.co.in

(This article was published in the Business Line print edition dated July 17, 2012)
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