Mindtree share price rose 4 percent in the early trade on January 19 after the company reported its December quarter earnings.
The company clocked an impressive 28.7 percent sequential growth in consolidated profit at Rs 326.5 crore for the quarter-ended December 2020.
Consolidated revenue grew by 5.1 percent quarter-on-quarter to Rs 2,023.7 crore and dollar revenue increased by 5 percent QoQ to $274.1 million during the October-December period 2020 with a record-high profit of $44.2 million, up 290 bps QoQ.
Here are the brokerages view on the stock and the company post December quarter results:
We have increased our revenue growth estimates by average 1.7% for FY22/23, and strong margin performance led to EPS upgrades of 4.6%/8.3% for FY22/23E. We maintain buy rating on company because it has one of the highest EBIT margins among Tier 2 peers now (exhibit 2), broad based growth across client buckets i.e. top account as well as ex-top account and ~ 50% exposures to fastest growing hi-tech space and strong growth in Retail, CPG, Manufacturing are offsetting slow recovery in TTH (Travel & Hospitality).
We continue to value company on 22X multiple for FY23 earnings of Rs 88.2 to arrive at a changed target price of Rs 1940 (earlier: Rs 1792). It is currently trading at 21.3/18.8X earnings of Rs 78.1/ 88.2 for FY22/23 respectively with EPS CAGR of 12% for FY21-23E.
A stable outlook for the top account, decent deal signings, and the ability to sustain improved margins are key positives.
The stock is currently trading at 20x FY23E EPS. The stock has been one of the best performers in the IT sector in CY20, with returns of 87%. We believe the key positives are already captured, and we see limited upside hereafter. Our target price of Rs 1,765 implies 21x FY23 EPS (15% discount to LTI). Maintain neutral.
Research house has maintained equal-weight rating on the stock and raised the target price to RS 1,645 per share.
According to the firm, the Q3 revenue was largely in-line, but margin significantly better. The company is confident of industry-leading growth with 20%+ margin going forward. The margin benefit could be used to drive growth, reported CNBC-TV18.
Kotak Institutional Equities
Kotak Institutional Equities has maintained sell call with a target at Rs 1,410 per share. The cost control & sharp utilisation increase led to margin expansion of 290 bps QoQ.
The elevated margin may not sustain as wage revisions, decline in utilisation weigh in.
The research firm raises FY21-24 EPS estimates by 9-14%, while stock looks expensive at current valuations, reported CNBC-TV18.
Goldman Sachs has reiterated buy rating with a target of Rs 1,998 per share. The company has reported better-than-expected Q3 revenue & margin, leading to operational beat.
The revenue growth is highest Q3 growth in over a decade & margin is at an 11-year high. The improvement in parameters like offshoring, higher utilisation led to this margin beat.
Goldman Sachs increases its FY21-23 EPS estimates by 5%/1%/1% and forecast 17.5% margin for the company over FY21-23, reported CNBC-TV18.
At 09:18 hrs Mindtree was quoting at Rs 1,724, up Rs 60.45, or 3.63 percent on the BSE.
The share touched its 52-week high Rs 1,780 and 52-week low Rs 691.95 on 11 January, 2021 and 03 April, 2020, respectively.Currently, it is trading 3.15 percent below its 52-week high and 149.15 percent above its 52-week low.