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Buy Mindtree; target of Rs 5249: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Mindtree has recommended buy rating on the stock with a target price of Rs 5249 in its research report dated January 13, 2022.

January 14, 2022 / 05:25 PM IST
The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

 
 
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Prabhudas Lilladher's research report on Mindtree


MTCL reported 5.2% QoQ CC, 4.7% QoQ USD growth (Ple: 5.1%, Cons: 6%), delivering greater than 5% QoQ CC growth for four consecutive quarters. Miss in revenue was led by softness in RCM (+0.1% QoQ USD) as Retail clients paused their digital transformation initiatives to focus on peak demand during holiday season. These initiatives have restarted in Q4 and growth momentum is back in RCM. Growth was healthy in rest of the verticals. MTCL reported healthy deal TCV of USD $358 mn, +14.6% YoY, flattish QoQ despite weak seasonality. It won 10 cloud deals this quarter on back of expanded partnership with one of the hyperscalars. Demand continues to be strong with increasing number of deals coming with large tail of growth.




Outlook


We raise our DCF based TP to INR 5,249 from earlier INR 5,141 (implied earnings target multiple of 39x on FY24 EPS). MTCL is currently trading at 41x/35.4x on earnings of INR 116.1/133.8 for FY23/24 respectively with Revenue/EPS CAGR of 17%/17% for FY22-24E.

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More Info on Trent


At 16:00 hrs Mindtree was quoting at Rs 4,545.00, down Rs 198.80, or 4.19 percent.


It has touched an intraday high of Rs 4,652.90 and an intraday low of Rs 4,477.25.


It was trading with volumes of 94,831 shares, compared to its thirty day average of 30,925 shares, an increase of 206.65 percent.


In the previous trading session, the share closed up 2.36 percent or Rs 109.45 at Rs 4,743.80.


The share touched its 52-week high Rs 5,059.15 and 52-week low Rs 1,539.85 on 18 November, 2021 and 24 February, 2021, respectively.


Currently, it is trading 10.16 percent below its 52-week high and 195.16 percent above its 52-week low.


Market capitalisation stands at Rs 74,904.02 crore.


For all recommendations report, click here


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first published: Jan 14, 2022 05:25 pm
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