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What should investors do with MindTree post Q2 results: buy, sell or hold?

The company board declared an interim dividend of Rs 7.50 per equity share (75 percent) of par value of Rs 10 each.

October 16, 2020 / 01:44 PM IST

Mindtree share price shed 3 percent in early trade on October 16 a day after the company reported its second quarter earnings.

Company has reported 19 percent QoQ jump in its consolidated net profit at Rs 253.7 crore against Rs 213 crore in the quarter ended June 2020.

Rupee revenue of the company stood at Rs 1,926 crore against Rs 1,909 crore and consolidated dollar revenue was up 3.1 percent at $261 million against $253.2 million.

The company board declared an interim dividend of Rs 7.50 per equity share. The record date for payment of the interim dividend will be October 27, 2020.

Here is what brokerages have to say about Mindtree post Q2 earnings:


KRChoksey says accumulate | Target Rs 1,420

In contrast with previous quarters, Mindtree’s Q2 FY21 earnings report reflects a more broad-based growth with verticals other than CMT clocking healthy growth, and share of Microsoft reducing slightly, albeit this remains work in progress. Profitability continues to surge, and this was the fifth successive quarter of EBIT margin improvement.

Dolat Capital maintains sell | Target Rs 1,190

Given inline growth performance but weakness in top client and significant offshore shift (nearly 200bps that will lead to some realization moderation) Dolat Capital has moderated its revenue estimates marginally for FY21/22 by 1%/2% respectively.

It sees current valuations unwarranted and thus maintains sell rating on the stock with a target price of Rs 1,190 valued at 17x FY23E earnings (implies 1.5x on PEG basis).

Prabhudas Lilladher maintains buy | Target Rs 1,625

Broking house trimmed revenue growth estimates by average 1.1% for FY22/23 on account soft deal wins, but strong margin performance led to EPS upgrades of 8%/0.6% for FY22/23E.

Motilal Oswal

Broking firm marginally upgraded its FY21/FY22 EPS estimates by 4%/3% as it adjusted revenue/margin trajectory with the margin surprise.

The stock is trading at 21x FY22 EPS. The stock has been one of the best performers in CY20 in the IT sector, with returns of 77% YTD. It believes the key positives are already captured and see limited upside hereafter. downgrade to neutral.

ICICIdirect maintains buy | Target Rs 1,680

Broking house believes the company’s expertise in digital technology will make it a key beneficiary of improved traction in the cloud in the coming years. In addition, vendor consolidation opportunities, improving win ratio, increase in annuity business will provide long term visibility to revenues.

MindTree’s aim to improve margins via employee pyramid, offshoring, pricing, utilisation and annuity business bodes well for profit growth.

At 09:20 hrs Mindtree was quoting at Rs 1,388.95, down Rs 35.90, or 2.52 percent on the BSE.

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Moneycontrol News
first published: Oct 16, 2020 09:36 am
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