Mid-tier IT player MindTree reported a reasonable set of numbers for the March quarter, outpacing larger peers Infosys and Patni Computer which experienced revenue and profit declines.

The company saw its revenues increase by 1.2 per cent sequentially to Rs 525.7 crore, while net profit increased by 13.7 per cent to Rs 68.9 crore.

Fairly sound volume (billed hours) growth, healthy large-client additions and an expansion in revenues from key service offerings were the highlights of the quarter.

But a fall in realisations and a mild decline in revenues from Europe are areas of concern. Attrition too continues to be fairly high.

Volumes for the March quarter were up 4.9 per cent sequentially, suggesting robust client traction. But this has been dampened somewhat by slippage in realisations, indicating decline in billing rates.

Client additions were healthy with three customers added in the $1 million category and one each in the $5 million and $10 million buckets.

MindTree has seen an increase in contribution of key services such as application development and maintenance as well as independent testing, which together account for over 82 per cent of revenues. This means that the company has been able to tap into non-discretionary IT spending of clients quite well.

Growing US revenues

Revenues from the US have grown faster than the overall company rate. But revenues from Europe declined, albeit marginally.

The banking and financial services space, an area of increasing focus for the company, too grew faster than the company's rate and now accounts for 21.2 per cent of revenues.

Attrition, though declining continues to be high at 18.2 per cent. The key takeaway from the result from an industry perspective is that clients continue to spend on basic ‘run the business' services that fall in the non-discretionary category.

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