InvestorQ : How were the Mindtree results for the Dec-21 quarter and why did the stock fall so sharply on 14 January?
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How were the Mindtree results for the Dec-21 quarter and why did the stock fall so sharply on 14 January?

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Rashi Mehra answered.
4 months ago
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Mindtree announced Dec-21 quarter results on 13th January. While there was good traction on top line revenues margins did come under pressure and the attrition was much higher than expected. Here are the quick numbers for you to peruse.

Mindtree Ltd

Rs in Crore

Dec-21

Dec-20

YOY

Sep-21

QOQ

Total Income (Rs cr)

₹ 2,750

₹ 2,024

35.89%

₹ 2,586

6.33%

Operating Profit (Rs cr)

₹ 592

₹ 468

26.54%

₹ 531

11.57%

Net Profit (Rs cr)

₹ 438

₹ 327

34.00%

₹ 399

9.68%

Diluted EPS (Rs)

₹ 26.50

₹ 19.81

₹ 24.19

OPM

21.53%

23.12%

20.52%

Net Margins

15.91%

16.13%

15.42%

Mindtree reported 35.9% growth in sales revenues at Rs.2,750 crore for Dec-21 quarter, with North America dominating with 77.2% revenue share. The balance share was split between Continental Europe, UK and APAC. Operating profits at Rs.592 crore were under pressure due to higher employee costs and a spike in sub-contracting expenses. As a result, the OPM fell from 23.12% in Dec-20 quarter to 21.53% in Dec-21 quarter.

Now for the bottom line. PAT for Dec-21 quarter was up 34% at Rs.438 crore in Q3. However, PAT margins at 15.91% were slightly lower than 16.13% in the Dec-20 quarter. The concern is the attrition rate at above 22% and has spiked by 500 basis points each in the lats 2 quarters, which is a big worry for the company and brought pressure on the stock. The board declared a final dividend of Rs.17.50 per share.

Let me talk about the price reaction. On 14 January, Mindtree closed 4.18% lower at Rs.4,546; with the fall in price being attributed to narrowing operating margins, higher manpower / outsourcing costs and above all a sharp spike in attrition. On 14 January, the stock of Mindtree touched a low of Rs.4,477. Interestingly, trading volumes on 14th January stood at Rs.1,143 crore, making Mindtree the seventh most traded stock on NSE.

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