Cholamandalam Securities is bullish on Mindtree has recommended buy rating on the stock with a target price of Rs 1056 in its research report dated January 17, 2019.
Cholamandalam Securities' research report on Mindtree
In 3QFY19, Mindtree’s revenue grew by 1.8% QoQ to INR 17.8bn, in-line with our expectations of INR 18bn driven by strong growth in digital vertical. Revenue from Digital business grew by 5.1% QoQ contributing 49.5% to total revenues. Volumes declined by ~1.1% QoQ and realized rate has gone up by 3.2% QoQ. The increase in realized rate is attributable to incremental revenues coming in at better pricing . In USD terms, revenues grew by 2.1% QoQ. In constant currency terms, revenue grew by 2.4% QoQ.
We introduce and rollover the valuation to FY21E. At CMP, the stock is trading at a P/E 14.6X/13.1X FY20E and FY21E EPS. We assign a target P/E multiple of 16X on FY21EPS to arrive at a target price of INR 1,056. We give a BUY rating on the stock.
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