Shares of IT player Mindtree fell almost 5% in intraday trade on BSE on July 14, a day after the company reported its June quarter scorecard.
The stock finally closed 3.93% lower at ₹2,785.55.
Mindtree on July 13 reported a 37.3% year-on-year (YoY) growth in its consolidated net profit at ₹471.6 crore for the quarter ending 30 June 2022 as compared to ₹343.3 crore in the same quarter last year. However, on a quarter-on-quarter (QoQ) basis, net profit dipped 0.3%.
Revenue from operations rose 36.2% to ₹3,121 crore in Q1FY23 as compared to ₹2,291.7 crore in Q1FY22.
Shares of Mindtree hit their 52-week high of ₹5,059.15 on November 18, 2021, on BSE but since then, it has been witnessing strong profit booking. As of July 13 close, the stock is down 43% from its 52-week high.
Brokerages expressed mixed views on the stock of Mindtree after the midcap IT firm released its June quarter numbers.
Brokerage firm ICICI Securities maintained a 'hold' call on the stock with a target price of ₹2,969 even as it said Mindtree’s Q1FY23 print was strong on all fronts. It highlighted Mindtree's six consecutive quarters of more than 5% QoQ CC growth, impressive beat on margins, record-high deal TCV (total contract value), and continued pace of hiring.
"We are impressed with Mindtree’s consistency and disciplined execution on profitability. We continue to value the stock at 23 times FY24E earnings per share (EPS) of ₹126 to arrive at a target price of ₹2,969. Rupee weakness is an upside risk to EPS while continued macro-weakness poses downside risk on valuations/revenue momentum," ICICI Securities said.
Kotak Securities has maintained a 'reduce' call on the stock with a target price of ₹3,150, citing that limited upside from current levels does not offer a sufficient margin of safety to balance out vulnerability to slowdown or recessionary scenario.
Kotak highlighted that despite strong all-round performance in FY22, the stock has corrected steeply by nearly 35% in the past six months due to fears of a slowdown and recession and concerns on integration with LTI.
"The stock has become an interesting one to look at after correction. We tweak our revenue estimates a tad resulting in 0-2% in increase in FY22-24E EPS," said Kotak.
Motilal Oswal Financial Services has a 'neutral' call on the stock with a target price of ₹3,020 and said that it has a 'neutral' view on the stock because of the stock's fair valuations (20 times FY24E P/E), and softness in retail and constraints on management bandwidth due to its impending merger with LTI.
"We raise our FY23 and FY24 EPS estimate by 6.1% and 2.3%, respectively, due to strong growth and margin beat. As the stock is trading at 20 times FY24E EPS, we see limited upside hereafter. Our target price of ₹3,020 implies 21 times FY24E EPS," said Motilal Oswal.
The brokerage, however, added that a strong outlook on strategic accounts, decent deal signings, and the ability to sustain improved margin are key positives.
Among the global brokerage firm, Jefferies has maintained an 'underperform' call on Mindtree with a target price of ₹2490. As reported by CNBC-TV18, Jefferies has raised estimates by up to 5% but remains wary of the company's exposure to short-cycle deals.
Morgan Stanley maintained an 'equal-weight' call on Mindtree with a target price of ₹4,450, reported CNBC-TV18. Morgan Stanley has attributed the 'equal-weight' call on the stock to balanced risk-reward while it added that the volatile macro environment is creating uncertainty about demand prospects.
An average of 35 analysts polled by MintGenie have a ‘hold’ rating on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking firms and not of MintGenie.
