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Prabhudas Lilladher
MindTree (Buy)
CMP: Rs 648
Target: Rs 700
MindTree reported another quarter of top-line growth touch-below our/consensus expectation, whereas, margin expansion was ahead of expectation. This is the fifth consecutive quarter of positive surprise on margin. We believe that continued focus on margin improvement, along with steady revenue growth, would shield the downside risk. We believe that achieving 5 per cent+ quarterly growth over the next three quarters would be a tough task to achieve as the increased macro uncertainty would further blur the deal visibility. However, the management was confident of achieving the growth target as they expect PES to grow 0-5 per cent, while, IT services to grow 15 per cent.
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