Hold MindTree; target of Rs 400: PINC Research

PINC Research has recommended hold rating on MindTree with a target price of Rs 400, in its April 21, 2011 research report.

"MindTree reported in-line revenue growth of 1.7% QoQ to Rs 3,912 mn due to volume growth of 2%QoQ after loss of revenue from Kyocera. EBITDA margin at 11.2% was lower than expectation. High forex gain led to EPS of Rs 7.8 (5%QoQ growth). Net employee decline was of 124 in Q4. The attrition rate continues to be high at 25.1% (90bpsQoQ increase). Utilisation rate (incl. trainees) increased 160bpsQoQ to 70.9%. It added 39 new clients in Q4. Fortune 500 clients count was 48."

"The loss of revenue from Kyocera will pull down the business volumes for FY12. However, the margin decline in Q4FY11 was higher than expectation particularly when there were no losses in products. The revenue growth in IT services is likely to be good but margin pose concern.  Maintain

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