InvestorQ : How did Mindtree report such strong numbers for Q2FY23?
Debbie Mascarenhas made post

How did Mindtree report such strong numbers for Q2FY23?

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Arti Chavan answered.
1 month ago
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It was an impressive set of numbers by Mindtree for Q2FY23 ending September 2022. For the quarter, Mindtree reported 31.5% growth in revenues on consolidated basis at Rs3,400 crore. In constant currency terms, the revenues were up 5.7% sequentially and 20.6% on a yoy basis. Mindtree had a total of 276 active clients as of September 2022 with their premium segment $5 million plus clients increasing to 61.

Its trailing attrition rate stood at 24.1%, largely in line with the overall industry median at the current juncture. The ROCE stood at 43.1% for the quarter while the ROE was 35.6%. Incremental deal TCV or total contract value of $518 million allowed total cumulative TCV to cross $1 billion. On a yoy basis, the revenue growth was 30-35% for North America and APAC but it was negative growth for UK and Europe; which is understandable. Here is a gist.

Mindtree Ltd

Rs in Crore

Sep-22

Sep-21

YOY

Jun-22

QOQ

Total Income (Rs cr)

₹ 3,400

₹ 2,586

31.48%

₹ 3,121

8.95%

Operating Profit (Rs cr)

₹ 716

₹ 531

34.86%

₹ 658

8.75%

Net Profit (Rs cr)

₹ 509

₹ 399

27.53%

₹ 472

7.87%

Diluted EPS (Rs)

₹ 30.83

₹ 24.19

₹ 28.57

OPM

21.05%

20.52%

21.09%

Net Margins

14.96%

15.42%

15.11%

Let us now turn to the profit performance of Mindtree for the September 2022 quarter. PAT for September 2022 quarter was up 27.53% at Rs509 crore as the company’s premium high value clients managed to boost margins and profit growth in a substantial way. The utilization rate is still above 80% and that is a good signal amidst such high attrition rates in the IT sector overall. It reduces the numbers in the bench and saves on manpower costs.

On a yoy basis, the company did face higher manpower costs and sub-contracting costs but at the same time, it also benefited from the higher revenues and improved mix made up for it. Net profit margins and the operating margins were lower on a yoy basis, which is the trend across the industry. But it is also lower on a sequential basis. This has been spurred by relatively higher forex and hedging costs incurred by Mindtree during the latest quarter.

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