Shares of Mindtree Ltd rallied over 5 percent in early trade on Tuesday after the midcap IT company reported strong earnings for the third quarter of fiscal 2021, beating the street estimates.

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The company clocked a 28.7 percent sequential growth in consolidated profit at Rs 326.5 crore for the quarter ended December 2020. Analysts polled by CNBC-TV18 had estimated a net profit of Rs 270.5 crore.

Consolidated revenue rose 5.1 percent to Rs 2,023.7 crore from Rs 1,926 crore and dollar revenue rose 5 percent sequentially to $274.1 million during the quarter. CNBC-TV18 poll had estimated revenue of Rs 2,007 crore and dollar revenue of $272 million.

“Our third quarter has by far been the best performing in recent years backed by broad-based revenue growth of 5 percent across our verticals and service lines, robust margin expansion of 350 bps (basis points), and a healthy order book of USD 312 million,” Mindtree CEO and Managing Director Debashis Chatterjee said.

He added that the company is witnessing strong business momentum across all verticals with significant demand for cloud, data and analytics capabilities.

EBIT during Q3FY21 surged 18.8 percent sequentially to Rs 396.2 crore, while EBIT margin expanded by 230 bps QoQ to 19.6 percent.

Read here:

Mindtree net profit rises 65.7% to Rs 326.5 crore in December quarter

Mindtree’s better-than-expected earnings led certain brokerages to raise the target price on the stock. Here’s what brokerages have to say:

Goldman Sachs

Goldman Sachs said that Mindtree reported better-than-expected Q3 revenue and margin, leading to the operational beat while noting that the revenue growth was highest in Q3 in over a decade and the margin was at an 11-year high.

Improvement in parameters like offshoring, higher utilisation led to this margin beat, it said.

The brokerage reiterated a Buy rating on the stock with a target price of Rs 1,998 per share. It increased its FY21-23 EPS Estimates by 5 percent/1 percent/1 percent and forecasts a 17.5 percent margin over FY21-23.

Morgan Stanley

The brokerage maintained an equal-weight rating and raised the target price to Rs 1,645 per share as it is of the view that the company’s Q3 revenue was largely in-line, but the margin was significantly better.

The company is confident of industry-leading growth with a 20 percent+ margins going forward while margin benefit could be used to drive growth, Morgan Stanley said.

Antique Broking

Mindtree reported strong growth across the portfolio with Q3FY21 revenue growth of 5.0 percent QoQ in USD terms, better than our expectations of 4.0 percent QoQ. Growth was broad-based with strong business momentum across all verticals with significant demand for cloud, data and analytics, the brokerage said.

“Mindtree has been able to maintain strong growth in-line with its peers. We expect this strong performance to continue in the medium to long term as the company continues to see strong momentum in digital and cloud-related work,” Antique Broking said.

It maintained a Buy rating on the stock, as it expects the company to report industry-leading growth in the near to medium-term. It raised the target price to Rs 1,950 per share from Rs 1,850 earlier.

The shares of Mindtree jumped as much as 5.96 percent to Rs 1,759.70 apiece on the BSE. At 9:50 am, the stock was quoting Rs 1,718.00, up 3.46 percent as compared to a 0.67 percent gain in the benchmark Sensex.

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(Edited by : Ajay Vaishnav)

First Published:Jan 19, 2021 10:12 AM IST