About the Company
Mindtree Limited is an Indian multinational information technology and outsourcing company headquartered in Bengaluru, India and New Jersey, USA. The company deals in e-commerce, mobile applications, cloud computing, digital transformation, data analytics, enterprise application integration and enterprise resource planning, with more than 339 active clients and 43 offices in over 17 countries.
Q4 2019 Updates
Financial Results & Highlights
Standalone Financials (In Crs) | ||||||||
Q4FY19 | Q4FY18 | YoY % | Q3FY19 | QoQ % | FY19 | FY18 | YoY | |
Sales | 18684 | 15230 | 22.68% | 17672 | 5.73% | 71108 | 56529 | 25.79% |
PBT | 2664 | 2504 | 6.39% | 2224 | 19.78% | 9867 | 7421 | 32.96% |
PAT | 1983 | 1821 | 8.90% | 1913 | 3.66% | 7540 | 5699 | 32.30% |
Consolidated Financials (In Cr) | ||||||||
Q4FY19 | Q4FY18 | YoY % | Q3FY19 | QoQ % | FY19 | FY18 | YoY | |
Sales | 18684 | 15231 | 22.67% | 17672 | 5.73% | 71108 | 56530 | 25.79% |
PBT | 2665 | 2505 | 6.39% | 2223 | 19.88% | 9868 | 7423 | 32.94% |
PAT | 1984 | 1822 | 8.89% | 1912 | 3.77% | 7541 | 5701 | 32.28% |
Detailed Results
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- The company had a good Q4 to round off an excellent year of performance. FY19 revenues were up more than 25% YoY while Q4FY19 revenues were up 22% YoY.
- The company enjoyed an increase of 6% YoY in PBT for the quarter while PAT rose rose almost 9% YoY for the year.
- The PBT and PAT for FY19 rose almost 33% and 32% respectively showcasing stellar profit growth in the past one year for the company.
- Segment growth for the company is as follows:
- Travel & Hospitality: 7%
- HiTech & Media: 24%
- Retail, CPG & Manufacturing: 5%
- BFSI: 4%
- Digital Businesses: 2%
- Mindtree also bagged more orders than last year with 7 new orders of more than $5 million, 4 orders of more than $10 million as compared to last year.
- The company has also significantly increased the number of BOTs that they have to 576 currently from 335 bots last year. (A BOT is defined as a software that acts autonomously, free from any interference, human or otherwise, to perform a significant task which will otherwise be performed by a human.)
Investor Conference Call Highlights
- The company has reached yearly revenues of more than a billion dollars for the first time.
- The company has added 15 new clients in the last quarter.
- Among their top 10 customers, 2 have been with the company since its inception 20 years ago.
- During the quarter, Mindtree has signed deals worth $242 million of which $158 million are from previous contract renewals and $84 million are from new contracts.
- The company is deciding on providing a final dividend of Rs 20 due to their stellar performance and their 20th anniversary this year. This dividend is to be finalised in the upcoming AGM in July.
- The company is giving guidance of conservative revenue growth of 10% to 15% in the upcoming year.
- The company is on a continuous capex schedule of developing onsite centres in San Jose and Minneapolis which is expected to continue this year.
- The management of the company maintained its distance from the L&T management and their open market bid.
- The company is confident of maintaining a stable TCV (Total Contract Value) for the coming financial year.
- The management is working towards improving margins by 100-120 basis points in the coming year.
- The company is reasonably confident of their clients’ growth which would be driving business for the company.
- Going forward on the package implementation side, the company is concentrating on the SAP suite of technologies as it has better positioning in this area and the rival technologies cuite of Oracle has seen a slowdown in the recent past.
Analyst’s View
Mindtree has been a consistent performer in the Indian IT sector. They have a stable pipeline of projects and deals as well as increasing number of bots to help facilitate their technological expertise and open new areas for their business.
At CMP of Rs 980, Mindtree’s stock appears to be fairly valued in terms of earnings of trailing twelve months. However, if earnings continue to grow the way they have been in the last few years, it may look attractive going forward due to stable cash flows, no-debt balance sheet and decent returns on equity. However, there has been a twist in this tale recently.
Mindtree has been in the news lately due to a hostile takeover by the Indian engineering behemoth, Larsen & Toubro. This is probably the first ever hostile takeover in the Indian IT market history. Now with L&T becoming the largest shareholder in the company, it may try to interfere with the operation and culture. IT services is a business built on development of relationships with clients over decades. Hence, it will be interesting to see how this scenario will play out in future when diverse cultures meet.
Disclaimer
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