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ICICI Securities Report
While revenue in this quarter is behind estimates, margin expansion and outlook surprised the street.
Mindtree Ltd. expects to keep its margins stable despite impending wage hikes, which would be an impressive achievement.
We reckon steady state Ebit/profit after tax margins of 17.5%/14.3% by FY23E, by when cost structure should converge with that of Larsen and Toubro Infotech Ltd.
1. Increasing share of fixed price projects,
2. focus on tail account rationalisation and
3. communication, media and technology led growth should drive further margin expansion.
Slight decline in top account (1% QoQ, U.S. dollar) in Q2 FY21 was understandable given the pandemic-led spike in Q1 FY21.
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