HDFC Securities has add call on Mindtree NSE -4.24 % with a target price of Rs 5060. The current market price of Mindtree Ltd. is Rs 4523.3. Time period given by analyst is one year when Mindtree Ltd. price can reach defined target.
Mindtree Ltd., incorporated in the year 1999, is a Mid Cap company (having a market cap of Rs 78185.29 Crore) operating in IT Software sector.
Mindtree Ltd. key Products/Revenue Segments include Software Development Charges for the year ending 31-Mar-2021
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 2820.80 Crore, up 6.01 % from last quarter Total Income of Rs 2661.00 Crore and up 35.27 % from last year same quarter Total Income of Rs 2085.30 Crore. Company reported net profit after tax of Rs 437.50 Crore in latest quarter.
Investment Rationale
The company is confident of delivering an EBITDA margin of >20%, despite the ongoing supply side challenges, as it expects support from better margins in new deals, higher offshoring, and better pricing. To address the issue of rising attrition (+420bps), the company continues to hire freshers (>50% of total hire) and when the freshers come into the billing cycle, the dependence on sub-con will reduce and utilisation will revive. The brokerage maintains revenue/EPS estimates for FY23/24E. Its target price of INR 5,060 is based on 37x Mar-24E EPS (25% CAGR over FY21-24E on a high base in FY21 of >70%).
Promoter/FII Holdings
Promoters held 61.0 per cent stake in the company as of 31-Dec-2021, while FIIs owned 15.72 per cent, DIIs 9.71 per cent.
