Mindtree Q3 PAT seen down 4.2% at Rs 52 cr

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Mindtree Q3 PAT seen down 4.2% at Rs 52 cr

Mindtree is likely to post a profit after tax of Rs 52 crore in the third quarter of financial year 2011-12, degrowth of 4.2% as compared to Rs 54.3 crore in the previous quarter.

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Mindtree is likely to post a profit after tax of Rs 52 crore in the third quarter of financial year 2011-12, degrowth of 4.2% as compared to Rs 54.3 crore in the previous quarter.

Revenues are seen going up by 15.6% to Rs 528 crore from Rs 456.7 crore quarter-on-quarter.

EBITDA is expected to go up to Rs 84 crore in the quarter ended December FY12 as against Rs 58.8 crore in an earlier quarter.

EBITDA is seen improving at 15.9% versus 12.9% during the same period.

Q3 highlights

CEO has been quoted in the press citing that sequential revenue growth could be around 3.5% (cross currency impact of 50-70 basis points)

Company has been showing strong momentum in FY12.
>Dollar revenues growth - Q2 at 9.5%, Q1 at 7.3%
>Volume growth strong - Q2 at 6.1%, Q1 at 6.2%

Operates in 2 segments
>IT services - Expected to remain strong. Q2 growth was at 11%, Q1 at 10.7%
>Product engineering (PE) (around 36% of revenues)- business is likely to be weak, may be even degrowth (indicated by the management post Q2). Revenue growth for PE services in Q2 was helped by IP-related revenues; Q2 growth at 9.6%, Q1 at 1.7%

Margin improvement is due to rupee depreciation. Internal target is to reach 14-15% in FY12

PAT could be lower due to forex loss. Q3 forex loss is seen at Rs 9 crore vs profit of Rs 17 cr

USD/INR hedge of 462 million at an average rate of Rs 48.53/USD

Two concerns to watch
>7% of MindTree's revenue comes from the Semiconductor segment, where it is witnessing signs of slowdown.
>New client addition at 15 (vs 25 in Q1) has been slow for the last few quarters (atleast last 8 quarters) --- management says it is to focus on core accounts