Buy MindTree; target of Rs 1970: ICICI Direct

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ICICI Direct's research report on MindTree

MindTree reported healthy set of Q3FY21 numbers and were above our estimates. The company reported dollar revenue growth of 5.0%QoQ above our estimate of 3.8% QoQ. The company registered EBITDA margin of 23.1% (up 286 bps QoQ mainly led by higher utilization and offshoring) and was higher than our expectation of 20.7%. The deal pipeline increased 3.0% QoQ and 50.7% YoY (due to low base last year) to US$312 million. The company added 368 employees in the quarter, its utilization increased by 430 bps QoQ to 83.1% and offshore effort mix increased by 70 bps QoQ to 82.8%.

Outlook

We maintain our BUY rating with a revised target price of Rs 1970/share (22x P/E on FY23E EPS) (earlier TP was Rs 1680).

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