Neutral Mindtree; target of Rs 2180: Motilal Oswal
Motilal Oswal recommended Neutral rating on Mindtree with a target price of Rs 2180 in its research report dated April 17, 2021.
April 20, 2021 / 04:37 PM IST
Motilal Oswal's research report on Mindtree
Mindtree (MTCL) delivered another strong quarter, with USD revenue growth of 5.1% QoQ, above our estimate of 4.3%, driven by robust growth outside of the top 10 accounts (+8.6% QoQ USD) and end of discounts in the Travel and Hospitality vertical (+17% QoQ USD). Deal TCV rose 20% QoQ to USD375m in 4QFY21 and the management indicated that deal pipeline is at a record high. It was able to deliver better than expected EBIT margin in 4QFY21 (18.6%, down 100bp QoQ) as wage hike impact (-240bp QoQ) was partially compensated by operational efficiency and higher utilization (84.3%, +120bp QoQ).
The stock is currently trading at 23x FY23E EPS. It has been one of the best performers in the IT sector in the last one-year, with returns of 175%. The key positives are already captured, and we see limited upside hereafter. Our TP of INR2,180 per share implies 24x FY23E EPS. Maintain Neutral.
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