Bangalore-based technology services and consulting company, Mindtree made a strong start to FY13, surpassing analysts’ estimates on all parameters for the quarter ended June 2022 (Q1FY23) on the back of strong margins and order book. The company posted 5% constant currency revenue growth for the sixth consecutive quarter. Mindtree also saw healthy hiring during this period. On Wednesday, shares of Mindtree saw a buying sentiment on optimism about the quarterly performance.
In Q1FY23, Mindtree recorded a net profit of 471.6 crores, an increase of 37.3% year-on-year, although sequentially – the growth was a modest 0.3%. stood on revenue 3,121.1 crore, up 36.2% year-on-year and 7.7% quarter-on-quarter. In Dollar By terms, the company reported net profit of $60.3 million, an increase of 29.7%, but down by 3.8% qoq, while revenue came in at $399.3 million — registering a growth of 28.6% yoy and 4% qoq.
Debashish Chatterjee, Chief Executive Officer and Managing Director, Mindtree. “With revenues of $399.3 million, 5.5% sequentially in constant currency based on healthy demand for our digital capabilities, this was our sixth consecutive quarter of revenue growth of over 5% in constant currency. Our EBITDA was 21.1% Our disciplined execution and operational rigor underlines our disciplined execution and operational rigor. Our highest order book to date of $570 million largely reflects the relevance of our value proposition in delivering business-critical transformation.”
On earnings, Mitul Shah, Head of Research at Reliance Securities said, “Mindtree reported a strong performance in 1QFY23, with EBIT margin of 19.2%, 75bps higher than our estimate of 18.4%. EBIT 9% QoQ (up 47%) increased from yo) to 5.9 billion while the EBIT margin was 19.2% (23bps QoQ / up 144bps YoY), 75bps above our estimate of 18.4% and 85bps above the consensus estimate of 18.3%. Revenue grew 4% QoQ/29% YoY to USD $399 million, exceeding our estimate of $397 million (consensus of $399 million). Sequential constant currency growth came in at 5.5% versus our estimate of 3.7%. (consensus 4.9%)
Aditi Patil – Research Associate at Prabhudas Lilladher in dollar terms said, “In-line revenue: Revenue $399.3 million, 4% QoQ terms (PLe: 4%, Cons: 4%), 5.5% QoQ CC (PLe: 5 %, Cons: 5.5%). Growth led by TTH 11.2% QoQ, BFSI 6.5% QoQ and CMT +5.9% QoQ. RCM declined 8.7% QoQ. Newly Incubated Healthcare vertical grew +43.5% QoQ. North America grew 8.5% QoQ. UK declined 18.7% QoQ and Continental Europe declined 9.2% QoQ. APAC and Middle East grew 2.6% QoQ. Strong deal TCV MTCL raised $570 million, 13% YoY , reported a record high transaction TCV of 46% QoQ.
Patil said, “Performance is good on all fronts. Strong revenue growth despite strong deal wins, healthy recruitment momentum, and weakness in RCM points to strong near-term demand. Margins amidst higher supply side pressures for the industry. Influenced by the beat.”
Should you invest in Mindtree shares after Q1 earnings?
Shares of Mindtree closed on BSE above 2,899.35 43.90 or 1.54%. Its market cap stood around 47,792.53 crores.
Shah said, “The company reported strong performance in 1QFY23 beating our estimates on all parameters. We expect the company to report healthy revenue on account of strong deal pipeline and strong order book. Revenue contribution from top customers 110bps QoQ up 26%, higher than the mid-cap peer group. Currently, we have a sell rating on the stock.”
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