Kotak Institutional Equities maintained its 'reduce' call on Mindtree and slashed its target to Rs 725
Mindtree fell more than 10 percent in morning trade on July 18 to hit a fresh 52-week low of Rs 675.05 on the BSE after the midcap IT company disappointed the Street by reporting more than 50 percent sequential fall in profit and operating income for the June quarter.
Most global brokerage firms maintained their rating on Mindtree but slashed target price post June quarter results.
BNP Paribas, which maintained its 'Reduce' call on Mindtree, slashed its target price to Rs 670 from Rs 810 earlier. FY20 outlook was lowered to factor in uncertainty.
The IT major reported a Q1 miss and lowered its FY20 guidance to above-IND rev growth. But, the company sees revenue growth and margin improving from Q2.
The global investment bank sees business volatility that could continue for some more time. It slashed FY20-22 EPS by 9-13 percent. The stock is trading at 17x FY20e P/E, which does not factor in risks adequately.
Profit during the quarter plunged 53.3 percent sequentially to Rs 92.7 crore, dented by a steep fall in operating income.
Revenue in rupee terms skid 0.3 percent QoQ to Rs 1,834.2 crore but dollar revenue increased 0.8 percent sequentially to $264.2 million with a constant currency growth of 1.1 percent QoQ in the April-June period.
Kotak Institutional Equities maintained its 'Reduce' call on Mindtree and slashed its target price to Rs 725.
Attrition increased sharply and is not a surprise, said the Kotak note. The only positive is a solid TCV despite hostile acquisition process. The deal pipeline remains strong, which is a positive sign.
The revenue growth can recover provided attrition is contained. The domestic brokerage firm slashed EPS estimate by 15-21 percent on revised currency assumption and pricing pressure.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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