Mindtree posts 61% rise in Q1 profit

Our Bureau Bengaluru | Updated on July 13, 2021

Debashis Chatterjee, CEO and MD

Hires 3,400 staff, the highest ever in a quarter

Larsen & Toubro-owned Mindtree beat analysts expectations to post a 61.2 per cent year-on-year increase in Q1 net profit for the current fiscal at ₹343.3 crore compared to ₹213 crore in the corresponding quarter a year ago.

The company's total revenue from operations stood at ₹2,291.7 crore, a 20 per cent y-o-y rise from ₹1,908.8 crore last year. “Our highest-ever order book of $504 million affirms that the focused execution of our strategy and our client-centricity in re-imagining business models for the digital era is helping us drive profitable and sustainable growth,” CEO and MD Debashis Chatterjee said in his commentary on Tuesday. “We are pleased to report a strong start to FY22 with broad-based first-quarter growth across all service lines and industry segments,” he further said. The mid-tier tech firm said its Q1 revenues in dollar terms were $310.5 million, a 7.7 per cent sequential increase and 22.6 per cent y-o-y. Net profit was $46.5 million, a growth of 7.5 per cent q-o-q and 64.7 per cent y-o-y. In Q1, the company saw its order book exceeding half a billion dollar at $504 million.

Increasing headcount

Responding to a media query on talent shortage driven supply challenges, Chatterjee said Mindtree was planning carefully to stay ahead of the game by hiring laterals and freshers. “Overall, our intake of freshers have increased. As a result, we onboarded more than 3,400 employees, our highest ever in a quarter, taking our headcount to 27,000,” he added.

Mindtree's industry segment BFSI grew at 6.4 per cent on a sequential basis. Communication, media, and technology grew at 6.9 per cent, retail, CPG, and manufacturing grew at 7.7 per cent, and travel, transport, and hospitality rose 13.1 per cent. The company had 260 active clients as of June 30. It added three new $5-million clients and five new $10-million clients in Q1 taking the tally to 47 and 25, respectively. It added just one $20 million client, taking it to a total of eight.

“During 1QFY22, Mindtree reported strong 7.7 per cent sequential revenue growth, but EBIT margin came in 50bps below our expectations. Going ahead, a strong order book provides good visibility of double-digit revenue growth over FY22, but rising attrition may weigh on EBIT margin. However, revenue contribution from top clients declined marginally to 27.4 per cent, which is still high compared to the mid-cap peer group. At CMP, the stock trades at 24x on FY24 consensus EPS, 20 per cent premium to Mphasis. However, we believe risk-reward is unfavourable given its expensive valuation, and high client concentration,” Suyog Kulkarni, Senior Research Analyst at Reliance Securities, said.

Published on July 13, 2021

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