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Mindtree stock fundamental analysis

Mindtree stock fundamental analysis
  • Market Cap:  18,529 Cr.
  • Current Price:  1,126
  • 52 weeks High / Low  1143.85 / 667.00
  • Book Value:  210.36
  • Stock P/E: 24.67
  • Dividend Yield: 1.15 %
  • ROCE: 27.28 %
  • ROE: 19.52 %
  • Sales Growth (3Yrs): 14.03 %
  • Listed on BSE and NSE
  • Company Website
  • Face Value:  10.00
  • PEG Ratio: 5.92
  • Promoter holding: 73.49 %
  • Pledged percentage: 0.00 %
  • Debt:  601.00 Cr.
  • Price to Earning: 24.67
  • EPS:  45.64
  • Net profit:  751.20 Cr.
  • Profit growth: 9.09 %
  • Profit growth 7Years: 9.76 %
  • Net profit preceding 12months: 630.90 Cr.
  • Profit growth 3Years: 14.65 %
  • Dividend yield: 1.15 %
  • Debt to equity: 0.17
  • Sales last year:  7,764 Cr.
  • Sales growth: 8.63 %
  • Unpledged promoter holding: 73.49 %
  • Investments:  1,539 Cr.
  • Intrinsic Value:  4,320

Mindtree is an international IT company delivering business and technology solution through software development. It delivers digital transformation and technology services from ideation to execution to ~2000 clients globally. Mindtree has been a leader in providing services that transform client’s businesses by leveraging digital technologies. Company mainly caters to Retail, CPG & Manufacturing (RCM), Travel & Hospitality sector, BFSI and High technology & media. Rostov Ravanan is the Managing Director and CEO of the company. L&T is the major promoter with shareholding of 60.55%. Mirae Asset Emerging Bluechip Fund has the largest shareholding among Mutual Funds with 2.27% of the total share capital.

 

Investment rationale
 

Expect Q2 to be better than Q1: The Company expects Q2 revenue to be better than Q1 and revenue recovery in H2. Deal wins remained healthy in Q1 at $391mn (on the back of $393mn in Q4FY20) despite challenging business environment. The management indicated that the deal pipeline remains robust, however have seen some delay in deal closures due to prevailing uncertainties. It continues to focus on strengthening existing relationships and mining strategic clients to secure large annuity type deals to improve revenue visibility. Tail account rationalization process is likely to continue over the next few quarters to focus on high-potential clients and improve profitability. The top client is expected to maintain growth momentum on the back of superior delivery quality, focus on growing annuity business, and multiple growth engines. CMT and CPG is seeing healthy demand traction. TTH is likely to have bottomed out in Q1, however softness is expected to persist for the next couple of quarters.

 

EBITDAM expands 110bps QoQ despite sharp decline in revenue: EBITDAM expanded by 110bps QoQ to 18.2%, driven by operating efficiencies (+30bps), forex impact (+80bps) and absence of one-off contribution to PM CARES fund (+100bps) partly negated by higher visa costs (-90bps). The management indicated that margins may expand further QoQ in Q2 if rupee remains stable.
 

Outlook and valuation: Factoring in the Q1 performance and higher margin assumptions. MTCL’s revenue performance remained skewed with top client driving incremental revenues. We expect steady performance in top client and expect company to do well. The stock is currently trading at a PE of 22.1x.
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