Home » Research » Kotak Research Center » Stock Recommendation Add Mindtree Technology Target Price Rs 1115

Research Report

How it helps?
  • Zero maintenance charges
  • Zero fees for demat account opening
  • Volume based brokerage
Reach Us
Learn the art of Investing

Read More >


  • Stock Recommendation: Mindtree — Add — TP Rs 1,115

    Publish Date: 19th July, 2018

    In turbocharged mode

    Mindtree has had the Midas touch this past financial year. With 27.1% (yoy) revenue growth and 30% (yoy) jump in net profit, you can excuse us for going a tad overboard. The scintillating numbers were driven by the company’s strong digital competence, burgeoning contracts and strong performance of its top client.

    You may call us hard-nosed, but there is still room for improvement. They can further diversify their client base by broadening their service offerings.

    Key Highlights

    • Revenues grew 6% (qoq) due to strong performance of its top client (16.4% growth).
    • EBITDA margin declined by 200 bps due to wage revisions, visa costs and a US$1.5 million grant to Stanford University. The margin dip would have been slightly higher had it not been for rupee depreciation and streamlining of operations.
    • Contrary to media speculation, the company’s promoters stated they are not looking to sell their stake in the near future.
    • A negative cash flow was the slight blip in the quarter report. One of the reasons was the extension of receivable collection cycle by three days to 83.
    • The company’s track record in closing deals has picked pace. The company’s total contract value is now worth $306 million. However, we observed that about 80% of the total contract will cease in a year’s time.
    • The company announced the resignation of its CFO.

    Valuation & outlook

    We feel the company will continue to clock in robust revenue growth of 17.3% in FY2019. The future looks stable for the company, especially after the top brass quashed media reports, and that’s another reason for us to raise the company’s EPS by 1-2%.

    Overall, the bank’s progress seems to be stable and we are comfortable to keep an ADD rating.

    Also read

         

    Don't have an account? Click here to open an account


    Click here to go back