Dolat Capital recommended accumulate rating on Mindtree with a target price of Rs 1150 in its research report dated October 17, 2018.
Dolat Capital's research report on Mindtree
USD revenue grew 2% QoQ (2.4 % QoQ CC terms) to USD 246mn (DCMe: USD 247mn) led by 6.3% growth in volume while pricing declined by 4.3%. INR revenue grew 7.1% QoQ at ` 17,554mn (DCMe: ` 17,316mn) helped by rupee depreciation. EBIT margin improved by 150bps QoQ at 13.1% (DCMe: 12.5%) helped by INR depreciation (+130bps) and absence of one-off cost on account of Standford university (+60bps) which was offset by negative impact of promotion & campus hire (-60bps). PAT improved by 30.4% QoQ to ` 2,063mn (DCMe: ` 1,763mn) on account of better margins and higher other income during the quarter. MTCL expects better revenue growth and margins for FY19 as compared to FY18 on back of better deal pipeline and healthy growth in digital services.
Outlook
The stock is trading at fair valuation of 16.9x/14.2x FY20/FY21 earnings; we maintain our ACCUMULATE rating and rollover to Sep’19 TP of ` 1,150 based on 18x one-year fwd. PER.
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