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Oct 16, 2012, 11.47 AM IST
Software services exporter Mindtree's profit after tax is expected to fall by 25% quarter-on-quarter to Rs 66 crore in the July-September quarter of 2012.
By Reema Tendulkar, Research Analyst at CNBC-TV18
Software services exporter Mindtree 's profit after tax is expected to fall by 25% quarter-on-quarter to Rs 66 crore in the July-September quarter of 2012.
Analysts on an average feel the expected foreign exchange loss in the quarter as against gain of Rs 8.6 crore in previous quarter caused the fall in profit after tax. Credit Suisse expects forex loss of Rs 34.5 crore in the quarter gone by.
Revenues (in dollar terms) are likely to go up by 2.2% QoQ to USD 107.8 million and (in rupee terms) are seen going up by 5.7% to Rs 595 crore during the same period.
Earnings before interest, tax, depreciation and amortisation (EBITDA) too is expected to increase to Rs 123 crore from Rs 117.4 crore QoQ but EBITDA margin is seen falling by 18 basis points to 20.67%.
Analysts feel revenue growth is expected to be muted for the third consecutive quarter while margins will be flattish as currency depreciation balances the headwind from wage hikes. Hike to around 40% of wage bill could hurt margins somewhat, say experts.
Mindtree operates in two segments: IT services, which contributes 65% of revenue, are expected to report low single digit. Product engineering services, which accounts for 35% of total revenues, have been a problem area. Product engineering (PE) saw ramp downs in previous quarter as revenues fell by 5% QoQ in June quarter but the management had said that PE will return to growth in September quarter.
Earlier the management says revenue growth of 11-14% has been in-line with NASSCOM forecast.
Management hopes to win 1-2 large deals (total contract value of more than USD 25 million) in the coming quarters. It hopes that this would enable it to deliver FY13 revenue growth in line with NASSCOM’s estimate.
FY13 growth will be driven by IT services.
CLSA says meeting NASSCOM guidance looks tough for the company. It had started a year with expecting a beat NASSCOM's expectations, but that has been curtailed later on.
The stock has been a strong midcap performer, more than doubling from Rs 350 at the start of the year to Rs 747 in September. Since then stock has corrected 9% to Rs 681 in October.
The outperformance was due to earnings recovery (its dollar revenues rose by 21.7% and PAT went up by 115% in FY12) and margin improvement led by currency/efficiency (margin rose significantly to 20.8% in Q1FY13 versus 11.2%).
But now the management expects a slowdown in overall growth momentum. The management now expects FY13 guidance to be inline with NASSCOM subject to 1-2 deals happening while earlier it was expecting a beat on NASSCOM guidance. A few brokerages expect growth to be lower than NASSCOM. So no massive upside is expected from the company.
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