Hold MindTree; target of Rs 1517: Arihant Capital

Arihant Capital 's research report on MindTree

Mindtree reported mix set of numbers in Q2FY21. Revenue stood below our estimates while EBITDA and PAT were above our estimates. Company has gained deals worth $303 million during Q2FY21 and anticipates a healthy order book going ahead. Consolidated revenue for Q2FY21 stood at Rs 19,260 mn, below our estimate of Rs 22,612 mn registering flattish growth of 0.9% QoQ/0.6% YoY growth. Reported EBITDA grew +57.3% YoY/+21.2% QoQ to Rs 3,903 mn, above our estimate of Rs 3,273 mn, while EBITDA margin expanded 730bps YoY/340bps QoQ. PAT for the quarter grew +88% YoY to Rs 2,537 mn, beating our estimate of Rs 2,073 mn. Outperformance on EBIDTA &PAT front was mainly due to better operational efficiency.

Outlook

At CMP of Rs 1427, Mindtree currently trades at FY20 P/E of 37.2x. We value Mindtree at P/E of 25x to its FY22E EPS 60.7, which yields target price of Rs 1517 per share. We maintain Hold rating on the stock.

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