Mindtree Q3 Results: Stellar performance above Street Estimates

Net Profit beats estimates: Mindtree reported a 34% YoY increase in its Q3 net profits to Rs 437 crore which is higher than the analysts’ estimates. In the same period last year, the company reported a net profit of Rs 326 crore. Sequentially, the net profit is up by 9.7%

Revenue growth: The company has reported a rise in revenue of 6.3% on-quarter to Rs 2,750 crore for the quarter ended December 2021. The year-on-year revenue growth was at 35.9% in the rupee term. 

Among the geographies, North America contributed the maximum revenue of 73%. The revenue breakup by industry was BFSI - 17.5%, Communications, Media, Technology - 43.1%, Retail, CPG & Manufacturing - 24.3%, Travel, Transportation & Hospitality - 13.8% and Healthcare - 1.3%.

EBIT margins: The Earning Before Interest and Taxes (EBIT) stood at Rs 5,289 crore. The EBIT margins were up by 1% at 19.2%. Sequentially, EBIT grew at 12.6% or Rs 601 crore.

Free cash flow: The company reported a free cash flow of Rs 4,595 crore, and cash and investments to the tune of Rs 30,723 for the December quarter.

Order Book and new deals:  Mindtree had deals worth $358 million as against $360 million the preceding quarter. As of December 31, the company reported 265 active clients. It added two clients in the $5+ million brackets, taking the total to 52, and three $10+ million clients for a total of 33.

The order book for the quarter was $358 million, up 14.6% year-over-year, and year-to-date deal TCV crossed $1.2 billion. 

Attrition higher: The attrition rate for Q3FY22 increased to 21.9% from 17.7% in the previous quarter. Attrition, last year in the same period was 12.5%. The company's total headcount increased to 31,959 employees in the December quarter from 29,732 in the previous quarter.

Management Commentary: "We are pleased to have continued our positive revenue momentum through the third quarter of FY22 on the back of robust demand, aggressive customer mining, and end-to-end digital transformation capabilities. The passion of our future-ready talent and the trust of our clients position us well in our endeavor to continue to deliver profitable industry-leading growth in the coming years." Mindtree CEO and Managing Director Debashis Chatterjee said.

Mindtree Q3 Results Review: 

Mindtree earnings have come in higher than street estimates in the Oct-Dec 21 period, aided by strong revenue growth across all service lines and industry segments. Also, the company has continued to report strong deal wins and has recorded the highest ever Order Book of over a billion dollars. 

The company's sequential revenue growth of 5.2% in constant currency reflects the strength of its strategy, execution, partnerships, and continued investments in its business and people. The stock price closed 2.68% higher at Rs 4760 per share.