Despite good Q1 numbers, brokerages divided on the Mindtree shares – check price target here

Despite steady and healthy first-quarter results, the brokerages are divided on the shares of Mindtree, though the mid-cap IT company meeting industry estimates.

Mindtree on Tuesday reported over 8 per cent jump in profit on a sequential basis to Rs 343.4 crore in the June-ended quarter of the financial year 2021-22 as compared to Rs 317.3 crore in Q4 FY21. The company’s year-on-year profit surged over 61 per cent from Rs 213 crore in Q1 FY21.

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The revenue of Mindtree in Q1 rose by 8.6 percent sequentially to Rs 2,291.7 crore, while revenue in dollar terms increased 7.7 percent to $310.5 million during the same period. The company reported the highest ever order book in the quarter of over $500 million.

In this regard, Morgan Stanley has an Overweight rating on Mindtree shares, but it points out that high multiples and limited EPS estimate upgrades limit absolute upside in this stock. It mentions broadening growth profile and improving revenue visibility auguring well and sets a target of Rs 2800 per share.

While Goldman Sachs has a Buy rating on Mindtree with an expectation of 20.5 per cent constant currency revenue growth in FY22. It mentions, strong dollar revenue led by broad-based growth across verticals and sets a price target of Rs 2863 per share.

On the other hand, Citi maintains a Sell call on Mindtree due to rich valuations and cuts the price target to Rs 2215 per share. The brokerage says the company reported good Q1, however, cashflow generation was weak in the quarter, it revises estimates by 2-3 per cent and raises multiple to 27x.

Mindtree Managing Director and Chief Executive Officer Debashis Chatterjee says in a management commentary, “We are pleased to report a strong start to FY22 with broad-based first-quarter growth across all service lines and industry segments.”

The shares of Mindtree ended flat but in the red on Tuesday by 0.14 per cent down to Rs 2494.75 per share on the BSE.