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Prabhudas Lilladher
MindTree (Buy)
CMP: ₹1,294.35
Target: ₹1,500
We attended ‘Analyst Day’ of MindTree (MTCL). Management highlighted their key ‘Digital-led growth’ strategies. According to Management, MTCL derives about 33 per cent revenue from Digital. Moreover, the growth opportunities in newer technologies such as Digital (about $225 billion by 2020E), IoT (ER&D spend about $175 billion), etc, is likely to drive revenue momentum for the company.
MindTree has created ecosystem of partnership for digital (Intel, Cisco, Micosoft, SAP, ThingWorx), cognitive computing (universities, start-ups), and autonomic computing (IBM, Microsoft) to exploit growth opportunities in these segments. There has been an increase in digital deal sizes, but no pricing premium. We expect unique positioning to drive mid-teens revenue growth in FY16. MindTree highlighted their new sales approach for contracts outside RFP-based. The company has imparted one month training to its sales professional to use newer media (such as LinkedIn) to make sales pitch. The company is going for aggressive outreach with newer content. We see new-age selling as an effective tool to generate new leads.
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