Shares of Mindtree have been witnessing a vertical fall despite the company posting decent numbers for the first quarter of the current fiscal.
The net profit for the June quarter stood at ₹158.2 crore against ₹121.7 crore in the year-ago period, up 30 per cent. Mindtree clocked revenues of ₹1,639.5 crore, an increase of 21 per cent compared to the ₹1,289.5 crore it posted in the same period last year. But sequentially, the mid-sized IT firm on Wednesday reported a 13 per cent decline in net profit from ₹182.2 crore.
However, most analysts are bullish on the stock.
Positive outlook
HDFC Securities analysts, Apurva Prasad and Amit Chandra, maintained their positive outlook on Mindtree citing strong growth visibility based on deal win momentum and strong pipeline; positive outlook of top-account (growth across multiple channels); ramp-up of recent large deal wins (airlines account); continuity in digital traction and industry-leading digital-mix.
Prabhudas Lilladher retained the ‘accumulate’ rating on Mindtree and revised the price target upwards to ₹1,200 from the earlier target of ₹1,060.
Led by strong Q1, we raise our dollar revenue growth estimates and now expect Mindtree to deliver 20 per cent dollar revenue growth for FY19E (versus 17 per cent dollar revenue growth modelled earlier). This would put Mindtree’s revenue growth at the strongest among peers in the sector, said Madhu Babu of Prabhudas Lilladher.
According to Motilal Oswal, Mindtree’s strong revenue momentum will also help its margins in the quarters to come. “As a result, we have increased our price target to ₹1,225, which discounts forward earnings by 19x,” Motilal Oswal said.
CFO steps down
Meanwhile, the company’s Chief Financial Officer Jagannathan Chakravarthi stepped down and has decided to pursue career opportunities outside Mindtree. He will be relieved from his duties from July 20.
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