Kotak Institutional raises Mindtree target price to Rs 900

Moneycontrol Bureau

Kotak Institutional Equities raised its target price on Mindtree to Rs 900 from 850, saying the stock offered good medium-term opportunity.

The mid-tier software services exporter on Monday reported fourth quarter results. Quarterly net profit was down 20 percent quarter-on-quarter (up 14 percent year-on-year) to Rs 79 crore and revenue rose 4 percent sequentially (17 percent YoY) to Rs 612 crore.

The stock ended down more than 2 percent and further slipped over 2 percent on Tuesday. The street may have given it a thumbs down, analysts say results were largely in line with expectations and still sound bullish, despite the 56 percent surge in the stock price in the last one year.

"The stock is a good medium-term bet, courtesy significant improvement in profile of client base and account management, consistency in delivery and execution and inexpensive valuations," Kotak said, advising investors "add" the stock.

Citigroup Global Markets maintained a "buy" on Mindtree, although it has slightly reduced its target price to Rs 1,010 from Rs 1,045.

Valuations at 9.3 times one year forward EPS (earnings per share) still look reasonable, it says. However, it has high leverage to discretionary spends and so a recovery here is key, it warns.

Religare Institutional Research, meanwhile, advises a "hold" on the stock.

"Given the lack of further margin triggers and limited acceleration in growth rates, we see limited scope for further earnings upgrades," it said, maintaining a target price of Rs 870 on the stock.

At 10:15hrs, Mindtree was down 1.6 percent at 836.55 on NSE.

Nachiket Kelkar
nachiket.kelkar@network18online.com