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YES Securities
Mindtree (Add)
Target: ₹2,735
CMP: ₹2702.15
Mindtree posted a strong sequential 7 per cent+ Q-o-Q USD revenue growth at $310.5 million. In INR terms, growth was 8.6 per cent QoQ led by rupee depreciation.
Revenue growth was above estimate — it delivered strong performance as the growth was broadbased and aided by traction in travel segment and North American market. EBIT margin declined by 90 bps QoQ to 17.7 per cent, which was as per expectation led by higher hiring in the quarter.
Deal win momentum remained strong as total contract value (TCV) for the quarter grew by 34 per cent q-o-q led by strong deal wins in digital, cloud and data. TTM (trailing twelve month) book to bill ratio of 1.4x provides strong revenue visibility for FY22. DSO (days sales outstanding) declined by 3 days q-o-q to 57 days. Mindtree has also added seven new clients compared to four in the previous quarter.
The newly launched healthcare segment is a step in the right direction. It has stepped up hiring and is well placed to cater to strong demand scenario. It would continue to make investments to boost growth and is expected to post high teen revenue growth for FY22, while maintaining EBITDA margin of over 20 per cent. The stock trades at 26.1x on FY23 earnings. We maintain ‘Add’ with a target price of ₹2,735.
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