Buy Mindtree; target of Rs 4509: KR Choksey

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26 Aug, 2025 12:21

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KR Choksey's research report on Mindtree

Mindtree (MTCL) has shown a stellar performance in Q4FY22, grew by 5.2% QoQ in CC terms, marking 6th consecutive quarter of 5%+ growth and inline our estimate. Dollar Revenue was up 4.6% QoQ to ~USD 384mn (KRChoksey est. USD 387mn). Rupee revenue grew by 5.4% QoQ to INR 28,974mn (KRChoksey est. INR 29,132Mn). Reported operating margin contracted by 30bps to 18.9% QoQ. Reported Net profit grew by ~8.1% QoQ to INR 4,735mn (KRChoksey est. INR 4,475mn) with margin of 16.3% (up 42bps on QoQ basis). The growth in the quarter for Mindtree was broad based and across geographies served, backed by rising appetite for digitization among clients, who seek business innovation for revenue maximization and other strategic outcomes. Deal TCV was at USD 390mn, up 4% YoY, comprising a healthy mix of annuity and transformational deals. Mindtree’s improvement in both growth/margin and correlation between TCV/growth on short cycle deals is led by (1) building full-stack account and account mining focus (top-100 driving 90% of revenue as well as reduced T1 concentration risk) and (2) focus on building partner ecosystem and hyperscalers proposition (MTCL has strong rating within leading cloud providers). MTCL is expected to deliver mid-teen growth, supported by expansion into Continental Europe and core portfolio focus (cross-sell), with predictable margins (management maintained 20%+ EBITDAM outlook). Our target price of INR 4,509 is based on 33x Mar-24E EPS with EPS CAGR of 15.4% over FY22-24E.

Outlook

MTCL is currently trading at a valuation with a P/E multiple of 32.7x/26.6x on FY23E/FY24E earnings. We expect Tier-2 Indian IT companies may suffer due to vendor consolidation under the pressured profit picture for customers, a less diversified revenue mix and a larger exposure to non-Global 1000 clientele along with continued industry wide supply headwinds and resumption of travel/facility expenses and hence we are assigning a P/E multiple of 33x to the FY24 estimated EPS of INR 136.7 to arrive at a downward revised target price of INR 4,509 per share (Earlier target price INR 5,263), an upside of ~24% over the CMP. We maintain a “BUY” rating to the stock.

More Info

At 17:30 Mindtree was quoting at Rs 3,638.70, down Rs 322.10, or 8.13 percent.

It has touched an intraday high of Rs 4,080.00 and an intraday low of Rs 3,564.75.

It was trading with volumes of 167,819 shares, compared to its thirty day average of 43,900 shares, an increase of 282.28 percent.

In the previous trading session, the share closed down 3.33 percent or Rs 136.35 at Rs 3,960.80.

The share touched its 52-week high Rs 5,059.15 and 52-week low Rs 1,999.85 on 18 November, 2021 and 19 April, 2021, respectively.

Currently, it is trading 28.08 percent below its 52-week high and 81.95 percent above its 52-week low.

Market capitalisation stands at Rs 59,978.06 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.

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