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Short Term Investment – Buy MindTree

Revenue grew 2.3%QoQ to USD103.7mn. Rupee revenue grew 13.8%QoQ to Rs5,197mn. Pricing growth of 3.5%QoQ and volume decline of 2.6%QoQ. EBITDA margin expanded 438bpsQoQ to 17.3%. Forex loss of Rs25mn against gain Rs171mn in Q2. PAT was Rs606mn, higher than streets’ and our expectation. EPS was Rs14.9, 10.7%QoQ.

IT services continued to grow at a healthy rate of 6.3%, thanks to milestone revenue from new Top client. Software Product Engg (SPE) registered a negative growth of 5%, due to seasonal weaknesses and intentional close down of few accounts. The company is confident of getting back SPE segment to growth trajectory in Q4. Travel & Transportation (T&T) led the growth with an increase of 16.4%. On geographical basis, Europe witnessed a good traction of 11.8%, followed by 8.6% growth from RoW (in $ terms).

Europe grew strongly 11.9%QoQ, US declined 1.5%QoQ and India declined 6.7%QoQ. US declined mainly due to seasonality and softness in PES revenues. Travel and transportation (T&T) surges- T&T grew strongly 16.5% and Manufacturing grew 2.3%QoQ. BFSI revenue had flat growth.

The Q3 revenues were inline with estimates, margin improvement and bottom line came as a positive surprise.  Management sounded cautious on Q4 results (similar kind of Q3 growth), especially in SPE segment, BFSI followed by manufacturing verticals.

This entry was posted on Friday, January 20th, 2012 at 10:03 pm and is filed under Short Term Investments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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