Buy Mindtree; target of Rs 3800: KR Choksey

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.

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

KR Choksey's research report on Mindtree

Mindtree (MTCL) has shown a stellar performance in Q2FY23, grew by 5.2% QoQ in CC terms, marking 8th consecutive quarter of 5%+ growth and beats our estimate. Dollar Revenue was up 5.8% QoQ to ~USD 422mn. Rupee revenue grew by 8.9% QoQ to INR 34,004mn. Reported operating margin remained flattish by -3bps to 19.1% QoQ due to wage hike impact of 240 bps which was partially offset by the absence of 60 bps one-off merger expense, 50 bps net tailwind from Rupee depreciation/cross-currency movements, 70 bps from operational efficiencies and remaining from lower travel and other expenses. Reported Net profit was up by ~8% QoQ to INR 5,087mn with margin of 15.0%, down 14bps on QoQ basis. The growth in the quarter for Mindtree was broad based and across geographies/services. Deal TCV was at USD 518mn, up 44% YoY, and seems to have benefited from the rise in longer tenure cost optimization deals. We believe that Mindtree can balance out the two mandate (1) cost saving as well as (2) revenue maximization but LTI, its merger partner, is better at handling the cost take-out part.

Outlook

Our target price of INR 3,800 is based on 27.8x Mar-24E EPS over FY22-24E.

More Info

At 17:30 Mindtree was quoting at Rs 3,374.45, up Rs 50.95, or 1.53 percent.

It has touched an intraday high of Rs 3,472.30 and an intraday low of Rs 3,343.80.

It was trading with volumes of 54,402 shares, compared to its thirty day average of 30,397 shares, an increase of 78.97 percent.

In the previous trading session, the share closed down 0.67 percent or Rs 22.25 at Rs 3,323.50.

The share touched its 52-week high Rs 5,059.15 and 52-week low Rs 2,650.00 on 18 November, 2021 and 26 May, 2022, respectively.

Currently, it is trading 33.3 percent below its 52-week high and 27.34 percent above its 52-week low.

Market capitalisation stands at Rs 55,663.45 crore.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Mindtree - 141022 - kr