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IT firm Mindtree on Wednesday reported a 34.6 per cent decline in consolidated net profit to Rs 135 crore for the September quarter, and said it sees a strong deal pipeline in second half of the current fiscal.
The company had posted a net profit of Rs 206.3 crore in the same period last year.
The Bengaluru-based company saw its revenue grow 9.1 per cent to Rs 1,914.3 crore in the quarter under review from Rs 1,755.4 crore in the year-ago period.
Mindtree Chief Financial Officer Pradip Menon said net profit had declined on account of two factors - foreign exchange impact and increase in employee salaries. ”...as the growth momentum picks up and the costs stabilise, we will see improvement in margins in the second half,” he said on a conference call.
In July this year, Larsen and Toubro (L&T) had acquired control of Mindtree with over 60 per cent share and was categorised as a promoter.
The four co-founders -- Subroto Bagchi, NS Parthasarathy, Krishnakumar Natarajan and Rostow Ravanan (who were also Board members) had quit after L&T took control -- marking the first hostile takeover in the Indian IT space.
Mindtree had named Debashis Chatterjee as the CEO in August.
Chatterjee said he has engaged closely with employees and clients and is “confident of the current situation and the deal pipeline looks healthy“.
“We stay committed in strengthening our execution to invest in growth and drive shareholder value,” Chatterjee added.
Net profit drops in dollar terms
In dollar terms, Mindtree’s net profit declined 34.1 per cent to $19.2 million, while revenue increased 10 per cent to $271 million in the said quarter over the year-ago period.
In constant currency terms (eliminating currency fluctuation from financial performance), revenue was up 3.2 per cent sequentially and 11.1 per cent year-on-year (y-o-y).
Shares of Mindtree closed at Rs 743.30 apiece, up 2.48 per cent from the previous close on the BSE.
During the second quarter, Mindtree signed deals worth a total contract value (TCV) of $307 million, out of which $186 million accounted for renewals.
Mindtree said it had seen broad-based revenue growth across verticals - Hi-Tech and Media grew 11.4 per cent; Travel and Hospitality was up by 11.9 per cent; banking, financial services and insurance (BFSI) by 6.3 per cent; Retail CPG and manufacturing expanded by 9.7 per cent on y-o-y basis.
The Board of Directors have declared an interim dividend of Rs 3 per equity share and the record date for payment of the same has been set for October 25.
At the end of the September quarter, the company’s active client base stood at 343. It had 21,267 employees at the end of the second quarter with trailing 12-months attrition at 16.5 per cent.
Its digital business grew 18.8 per cent y-o-y, and the company recorded a 13.3 per cent growth in total contract value in the quarter under review.
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