ICICI Direct: Mindtree’s Robust Deal Wins; Improved Margin Performance In Q1
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ICICI Direct Report
MindTree reported 9.0% QoQ dip in dollar revenues, mainly led by 54.5% dip in travel and hospitality revenues. However, cost efficiency, rupee depreciation led margins to improve by 108 basis point QoQ to 16.9%. In addition, the company has registered healthy deal pipeline, which increased 20.7% YoY.
We believe the company’s strategy to increase the annuity business will provide long term visibility to revenues. In addition, Mindtree’s aim to improve margins via employee pyramid, offshoring, pricing, utilisation and annuity business bodes well for profit growth. Further, the company has changed the forex hedging strategy to a three year period, which will provide better profit after tax margin visibility.
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