Mindtree Ltd reported an excellent fourth quarter with 4.5% sequential revenue growth and 200 bps Ebitda margin expansion. Growth was led by the focus areas of the company, including cross-sell of services to existing accounts. Deal wins are excellent in terms of profile of clients (F-500 segment), scope (large, multi-service) and against large global and offshore incumbent. This lends comfort on sustainability of growth and maturation of business model. We raise FY2015-16E revenue and EPS growth estimate by 2-3%. We raise our target price by 2% to R1,625 and add rating on the stock.
Mindtree reported a 4.5% growth in revenues to $133 million, 1.5% ahead of our estimate. The hitech vertical (erstwhile PES) grew 6% to $36.4 million; this is not sustainable in our view and was possibly aided by IP-led revenues. Infrastructure management was once again the primary growth driver (9.2%). Package implementation practice grew 78% q-o-q to $5.4 million. IT services grew 3.9% to $96.4 million. Ebitda margin rose 200 bps to 21.5% due to 1.5% increase in offshore realisation and decline in non-manpower costs on a sequential basis. Net income of R98.2 crore (+11% q-o-q, +24.5% yoy) was 5% higher than our estimates.
Kotak Institutional Equities
