Mindtree Q4 Results: Profit jumps 49% on-year, declares dividend of Rs 27 per share

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Net Profit beats estimates: Mindtree reported a 49% YoY increase in its Q4 net profits to Rs 473.1 crore which is higher than the analysts’ estimates. Analysts' have earlier estimated a profit of Rs 437 crore. In the same period last year, the company reported a net profit of Rs 317 crore. Sequentially, the net profit is up by 8.1%.

Revenue growth: The company has reported a rise in revenue of 37% YoY to Rs 2,897 crore for the quarter ended March 2022 compared to Rs 2,109 crore in the corresponding quarter last year. The growth driven by strong discretionary spending and new deal wins. BFSI and the Travel segments were the major growth drivers. Among the geographies, North America contributed the maximum revenue of 76.6%.

EBIT margins: The Earning Before Interest and Taxes (EBIT) stood at Rs 6,083 crore. The EBITA margins were up from 19.2% to 20.9%, the highest in the decade. Sequentially, EBIT grew at 2.7%, or Rs 162 crore.

Free cash flow: The company reported a free cash flow of Rs 5,029 crore, and cash and investments to the tune of Rs 36,012 for the March quarter.

Order Book and new deals:  As of March 31, the company reported 276 active clients. It added four clients in the $5+ million brackets, taking the total to 56, and five $20+ million clients for a total of 14. The order book stood at $1.6 billion, up 16.7% year-over-year, and quarterly deal TCV crossed $390 million (Total Contract Value). 

Attrition higher: The attrition rate for Q4FY22 increased to 23.8% from 21.9% in the previous quarter. The company's total headcount increased to 35,071 employees in the March quarter from 31,959 in the previous quarter.

Dividend: The company's board has recommended a final dividend of Rs 27 per equity share for the financial year ended March 31, 2022. It takes the full-year dividend to Rs 37, the highest in the company's history. The final dividend is subject to the approval of shareholders at the 23rd Annual General Meeting.

Management Commentary: "Our industry-leading growth through a year of rapid business and technology shifts demonstrates the relevance of our value proposition in reimagining businesses and driving digital transformation at scale. Our commitment to creating value for shareholders is reaffirmed by an EPS of Rs 100.2, our highest-ever adjusted for bonuses." Mindtree CEO and Managing Director Debashis Chatterjee said.

Merger News: As per a Bloomberg report, L&T's two portfolio software companies, L&T Infotech and Mindtree may merge as soon as next week. The two IT companies have offered no comments on the reported development. L&T had acquired a 61% stake in Mindtree in 2019 for over Rs 10,000 crore. L&T also owns a 74% stake in L&T Infotech. The combined market capitalization of both firms is nearly Rs 1.66 lakh crore. However, the management avoided commenting on this news.

Mindtree Q4 Review:

Mindtree earnings have come in higher than street estimates in the Jan-Mar 22 period, aided by strong revenue growth across all service lines and industry segments. The company has continued to report strong deal wins. The company delivered EBITDA margin of 20.9% and PAT margin of 15.7%, its highest in a decade. The management is quite optimistic about its growth in near future.

The share closed 3.44% lower at Rs 3,956 on Monday. 

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