Mindtree Q3 Review: Margin Beat, Raise Cycle Seems To Be Over, Says ICICI Securities

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ICICI Securities Report

Besides transient Covid-19 led tailwinds, Mindtree Ltd.’s margin expansion was aided by sustainable and structural changes in costs.

While we expected parity with cost structure of Larsen and Toubro Ltd. by FY23E, the convergence has happened earlier! As some of the operational metrics (e.g. utilisations, salary costs) recalibrate towards their new normal, margins are more likely to contract (than be stable or increase).

Incrementally, as investor focus shifts from mere cost structure correction to growth, we see limited margin of safety for disappointments given the favourable FY21 base.

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