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Operating Results inline, constant OPM gains to lead upgrades
Mindtree declared its Q4 FY12 results with a topline growth of 1.2% at ` 5.2bn,
largely in line with our expectations of ` 5.3 bn. In USD terms, Company delivered
a growth of 1.3% QoQ at USD 105 mn, driven by strong volumes uptick of 4.9%
(Previous quarter volumes has declined by 0.8%) covering up for pricing fall of
3.6%; booked from a transition project of a key European client.
The deal momentum continue to remain strong as it bagged couple of key
deals and added 6 new clients during the quarter. Top client revenue share
declined 7.4% QoQ as it normalized from the one time revenue booking of a
mile stone project in previous quarter. Top 2-5 accounts grew 7.6% sequentially.
EBITDA margins improved further by 148bps (company has shown an EBITDA
margin improvement by 749 bps from 11.2% in Q4FY11 to 18.7% in Q4FY12)
as it benefited through rationalization in the employee pyramid and improvement
in the realizations from Fixed Price projects.
PAT grew by 13.7% QoQ at ` 689mn ahead of our estimates of ` 618 mn, on
account of better operational efficiency and increased other income (up 41%
QoQ at ` 51 mn).
The management is confident on the outlook for IT services but has cautioned
on opportunities from the semi-conductor and consumer device segments in
the coming period (H1). The company expects growth ahead of industry for
FY13 but largely back ended. We believe the sustained business momentum;
improved efficiency would support the valuations upgrades. We continue to
remain positive on the stock with a Buy rating on the stock and a target price of
` 625 (valued at 8x of its FY14E EPS of ` 78).
Key Highlights
Revenue up 1.3% QoQ at USD 105 mn driven by volume growth of 4.9% QoQ,
led by 1.7% growth in IT Services revenues and flat growth from PES. In reported
terms, company has shown a growth of 1.2% at ` 5257 mn against our estimations
of ` 5324 mn.
Operating profits has increased by 9.8% QoQ at ‘ 985 mn with OPM improvement
(EBITDA margin) of 148 bps to 18.7%. The improvement in margins is majorly
driven by rationalized employee pyramid and improved operational efficiency.
Other income improved by 42% to ` 51 mn from ` 36 mn in Q3FY12. It also
recorded a forex loss of ` 40 mn in this quarter.
The Company had a net addition of 66 employees during the quarter, and also
witnessed a drop of 120 bps in attrition to 18.2% from 19.4%.
PAT improved by 13.7% QoQ to ` 689mn, above our estimations of ` 618 mn on
account of rationalization of employee pyramid and better operational efficiency.
PAT margins improved by 145bps to 13.1% from 11.7% in Q3FY12. Effective
tax rate for the quarter is 16.5% lower than 17.4% of previous quarter.
Valuation
We expect a revenue/EPS CAGR of 18/20% over FY12-14E as the company gains
from improved demand environment and strong deal pipeline. We believe the stock
will see earning/target upgrades and will outperform in near term. Thus, we maintain
our Buy rating on it with a target price to ` 625 valued at 8x on its FY14E EPS of `
78.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Operating Results inline, constant OPM gains to lead upgrades
Mindtree declared its Q4 FY12 results with a topline growth of 1.2% at ` 5.2bn,
largely in line with our expectations of ` 5.3 bn. In USD terms, Company delivered
a growth of 1.3% QoQ at USD 105 mn, driven by strong volumes uptick of 4.9%
(Previous quarter volumes has declined by 0.8%) covering up for pricing fall of
3.6%; booked from a transition project of a key European client.
The deal momentum continue to remain strong as it bagged couple of key
deals and added 6 new clients during the quarter. Top client revenue share
declined 7.4% QoQ as it normalized from the one time revenue booking of a
mile stone project in previous quarter. Top 2-5 accounts grew 7.6% sequentially.
EBITDA margins improved further by 148bps (company has shown an EBITDA
margin improvement by 749 bps from 11.2% in Q4FY11 to 18.7% in Q4FY12)
as it benefited through rationalization in the employee pyramid and improvement
in the realizations from Fixed Price projects.
PAT grew by 13.7% QoQ at ` 689mn ahead of our estimates of ` 618 mn, on
account of better operational efficiency and increased other income (up 41%
QoQ at ` 51 mn).
The management is confident on the outlook for IT services but has cautioned
on opportunities from the semi-conductor and consumer device segments in
the coming period (H1). The company expects growth ahead of industry for
FY13 but largely back ended. We believe the sustained business momentum;
improved efficiency would support the valuations upgrades. We continue to
remain positive on the stock with a Buy rating on the stock and a target price of
` 625 (valued at 8x of its FY14E EPS of ` 78).
Key Highlights
Revenue up 1.3% QoQ at USD 105 mn driven by volume growth of 4.9% QoQ,
led by 1.7% growth in IT Services revenues and flat growth from PES. In reported
terms, company has shown a growth of 1.2% at ` 5257 mn against our estimations
of ` 5324 mn.
Operating profits has increased by 9.8% QoQ at ‘ 985 mn with OPM improvement
(EBITDA margin) of 148 bps to 18.7%. The improvement in margins is majorly
driven by rationalized employee pyramid and improved operational efficiency.
Other income improved by 42% to ` 51 mn from ` 36 mn in Q3FY12. It also
recorded a forex loss of ` 40 mn in this quarter.
The Company had a net addition of 66 employees during the quarter, and also
witnessed a drop of 120 bps in attrition to 18.2% from 19.4%.
PAT improved by 13.7% QoQ to ` 689mn, above our estimations of ` 618 mn on
account of rationalization of employee pyramid and better operational efficiency.
PAT margins improved by 145bps to 13.1% from 11.7% in Q3FY12. Effective
tax rate for the quarter is 16.5% lower than 17.4% of previous quarter.
Valuation
We expect a revenue/EPS CAGR of 18/20% over FY12-14E as the company gains
from improved demand environment and strong deal pipeline. We believe the stock
will see earning/target upgrades and will outperform in near term. Thus, we maintain
our Buy rating on it with a target price to ` 625 valued at 8x on its FY14E EPS of `
78.
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