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Mindtree logs strong Q1 on record deal wins, revenue growth

With $500-mn TCV, it posts its highest ever deal wins for any quarter, records broad-based growth in April-June

Mindtree logs strong Q1 on record deal wins, revenue growth
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Mindtree logs strong Q1 on record deal wins, revenue growth

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Mid-tier IT services company Mindtree posted better than expected first quarter results on the back of broad-based growth across verticals coupled with healthy deal wins.

For the first quarter ended June 2021, Mindtree reported a net profit of Rs343.4 crore, which was 61 percent higher than the same period of last fiscal. Revenues of the firm stood at Rs 2,291.7 crore, a rise of 20 per cent over a year ago.

In dollar term, revenues were at $310.5 million, a growth of 22.6 per cent over last fiscal. In sequential term, revenues increased 7.7 per cent, beating the expectation of the street.

"We are pleased to report a strong start to FY22 with broad-based first-quarter growth across all service lines and industry segments," said Debashis Chatterjee, CEO and MD of Mindtree.

The L&T group company reported its highest ever order book of $504 million during the April-June period. The order book size was 34 per cent higher than the previous quarter.

During the quarter, the company added one client in the $20 million plus category and five clients in the $10 million plus category, indicating traction for its service offerings. "Our highest-ever order book of $504 million affirms the focused execution of our strategy," Chatterjee said. However, the company saw dip in its operating margin owing to wage hike given to employees. The operating margin for Q1 of FY22 stood at 20.3 per cent, a fall of 160 basis points sequentially.

The Bengaluru-headquartered company witnessed growth coming from all its major verticals and geographies during the quarter. While the technology, media & services vertical grew 6.8 per cent QoQ; retail, CPG & manufacturing was up 6.3 per cent. The BFSI (banking, financial services & insurance) vertical rose 6.6 per cent sequentially, while travel & hospitality vertical posted 12.8 per cent growth over the preceding quarter.

Among geographies, the company reported 7.7 per cent sequential growth in North America, while continental Europe saw 30.4 per cent rise in revenues. The company added 3,442 new employees on net basis during the June quarter, taking the employee count to 27,256. However, attrition rate during the quarter jumped to 13.7 per cent from 12.1 per cent in the preceding quarter.

"The company's QoQ revenue growth could be one of the best among its large cap & mid-cap peers. In addition, the current quarter growth was broad-based across verticals and clients (not dependent on top client). In addition, despite wage hike the company has maintained margins above 20 per cent. Hence, we have a positive view on the stock," wrote ICICI Securities on a report.

Debasis Mohapatra
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