Centrum: Mindtree’s Top Account Negates Headwinds In Other Verticals
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Centrum Broking Report
Mindtree’s 1QFY21 results delivered modest miss on USD revenues. EBIT margin was inline and higher other income and lower depreciation led to profit after tax beat our estimates by 7%. Top account Microsoft revenues surged 10.5% QoQ and top account now contributes to 30.1% of total revenues. Revenues from Top 2-10 accounts were down 12% QoQ. We believe demand for Collaboration platforms ( Microsoft Teams etc) owing to Work from Home could have led to steep surge in Top account growth.
Overall , increasing contribution from Top account (now 30% of total revenues) has a flip side as well. Led by 1QFY21 revenue miss, we lower Mindtree’s U.S. dollar revenue growth or decline to 12.3% for FY21/FY22E verses 11% modelled earlier. Mindtree’s adjusted EBIT margin for 1QFY21 stands at 15% and company has strong margin execution under new leadership. Steady margin execution and lowering depreciation leads us to raise earning per share estimates by 9/5% for FY21/FY22.
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