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MindTree
Executive Chairman exits
Ashok Sootha, Executive Chairman & Co-Founder of MindTree,
has announced his exit from the company, effective 31 Mar ’11. He
plans to start his own business venture, post his exit. He has been
instrumental in establishing MindTree with eight other founder
members. Prior to co-founding the company, he was President of
Wipro Infotech during 1984-1999. Under his leadership, Wipro’s
IT business grew to US$500m in 1999 from US$2m in 1984.
Impact. We believe that the exit will act as a further dampener for
MindTree, especially when it is struggling with its Kyocera
acquisition as well as the loss relating to the handset business, which
it exited. The company’s ambitious target of achieving US$1bn
revenue by FY14 will get impacted and hence, postponed further.
Also, in absence of stability at the top management level, the
company may find it difficult to bag new orders.
Uncertainty prevails. Mr Sootha holds 11.14% of the total
promoter holding of 32%. There is no clarity about his stake post
his exit from the company. Also, we await clarity about his
successor.
Valuation. We retain our target price of `490, based on target PE
of 12x FY12e adjusted EPS of `41.2, which is at 35% discount to
average large-cap FY12e target multiple and in line with that of
mid-caps’.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
MindTree
Executive Chairman exits
Ashok Sootha, Executive Chairman & Co-Founder of MindTree,
has announced his exit from the company, effective 31 Mar ’11. He
plans to start his own business venture, post his exit. He has been
instrumental in establishing MindTree with eight other founder
members. Prior to co-founding the company, he was President of
Wipro Infotech during 1984-1999. Under his leadership, Wipro’s
IT business grew to US$500m in 1999 from US$2m in 1984.
Impact. We believe that the exit will act as a further dampener for
MindTree, especially when it is struggling with its Kyocera
acquisition as well as the loss relating to the handset business, which
it exited. The company’s ambitious target of achieving US$1bn
revenue by FY14 will get impacted and hence, postponed further.
Also, in absence of stability at the top management level, the
company may find it difficult to bag new orders.
Uncertainty prevails. Mr Sootha holds 11.14% of the total
promoter holding of 32%. There is no clarity about his stake post
his exit from the company. Also, we await clarity about his
successor.
Valuation. We retain our target price of `490, based on target PE
of 12x FY12e adjusted EPS of `41.2, which is at 35% discount to
average large-cap FY12e target multiple and in line with that of
mid-caps’.
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