Mindtree shares down 2% after Q1 results. Should you buy, sell or hold the stock?

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Mindtree share price fell 2 percent in the early trade on July 14 - a day after the company posted better numbers for the quarter ended June 2022.

IT services firm Mindtree on July 13 said its net profit for the quarter ended June stood at Rs 471.6 crore, up 37.3 percent year-on-year (YoY) against Rs 343.4 crore in the year-ago period. On a sequential basis, however, the numbers were flat.

Revenue from operations came in at Rs 3,121.1 crore, up 36.2 percent YoY from Rs 2,291.7 crore, while it climbed 7.7 percent from Rs 2,897,4 crore QoQ.

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Here is what brokerages have to say about stock and the company post June quarter earnings:

UBS

Research firm UBS has kept the 'sell' rating on the stock with a target at Rs 2,700 per share. The company delivered margin improvement, largely on account of higher forex gain, it said.

The ability to improve margin in high inflationary environment is commendable. See risk of company running too thin on its subcontracting, onshore efforts, reported CNBC-TV18.

Morgan Stanley

Brokerage house has remained 'equal-weight' on the stock with a target at Rs 4,450 per share on the back of balanced risk-reward.

The company posted better-than-expected results, with strong H1 outlook. The reiteration of 20 percent margin is a key positives. The volatile macro environment is creating uncertainty about demand prospects.

Nomura

Foreign research house Nomura has kept the 'neutral' rating on the stock and raised the target to Rs 2,910 per share.

The company is bucking the trend with margin stability, while headcount increase signals strong growth will continue.

The Q1 results deliver a beat on all parameters, with revenue performance was strong considering weakness in retail vertical. The margin performance is impressive; positioning itself to sustain supply side issues, it said.

Nomura raises FY23-24 EPS estimates by 2-3 percent, reported CNBC-TV18.

Jefferies

Brokerage house Jefferies has maintained 'underperform' rating on the stock with a target at Rs 2,490 per share.

The Q1 beat led by strong margin delivery on back of lower employee costs. The deal wins were at $570 million, which at an all-time high.

The company management reiterated strong demand for H1FY23.

Jefferies raises estimates by up to 5 percent, remain wary of comapny's exposure to short-cycle deals, reported CNBC-TV18.

Motilal Oswal

The management’s increased focus on annuity revenue and strategic accounts is reflected in its revenue and client mix.

A strong outlook on strategic accounts, decent deal signings, and the ability to sustain improved margin are key positives.

The stock is currently trading at 20x FY24 EPS. As the key positives are already captured, we see limited upside hereafter. Our Taregt Price of Rs 3,020 per share implies 21x FY24 EPS. We maintain our 'neutral' rating, it said.

Prabhudas Lilladher

Growth was broad-based across verticals with exception of decline in RCM (-8.9 percent QoQ in dollar terms) due to client specific issues. Management re-iterated their commentary of strong near term demand given record high deal TCV and robust deal pipeline.

Our EPS estimates remain largely unchanged. We model 20.3 percent/20.5 percent EBITDA margin for FY23/24.

We continue to value stock on 24x (FY24 EPS) to arrive at target price of Rs 3,131 (earlier Rs. 3121). Maintain ‘Accumulate’.

At 9:17am, Mindtree was quoting at Rs 2,845.00, down Rs 54.35, or 1.87 percent on the BSE.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.