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Thursday 14 October 2021

Mindtree revs up … and up

logoAfter flying off the starting blocks in its new FY (see Mindtree off to a storming start), Bangalore-based mid-tier offshore services supplier Mindtree upped the pace – and profitability –  in FQ2.

Mindtree’s headline revenues for the three months ending 30th September 2021 grew by 34% yoy to $350m, the company’s highest quarterly yoy growth in a decade, and streets ahead of larger peers TCS, Infosys and Wipro. Sequential growth at 12.8% was outstanding. Operating margins (by our estimates) improved both yoy and qoq to 18.2%.

In a really refreshing change of fortunes, the UK was the star performer, with revenues growing by 85% yoy reaching $38m, comprising a record 11% of Mindtree’s worldwide revenues.

Like larger peers, Mindtree witnessed a step jump in attrition, hitting 17.7%, up four points yoy and qoq. This is somewhat unexpected and looks like a ‘structural’ issue in the India-based IT services industry which we will try to understand better. In any event, Mindtree continues to recruit like crazy, with worldwide headcount up 36% yoy to over 29,700 FTEs, 9% higher than the prior quarter.

Mindtree’s challenge is to keep up this hectic pace of growth without compromising profitability. CEO Debashis Chatterjee appears to think they can do just that, expecting “profitable, industry-leading growth in FY22”. Investors are avid believers – Mindtree’s share price closed at Rs4,888 yesterday, tripling in value since the beginning of the year!

We will be meeting management later this month and will add colour and movement then.

Posted by: Anthony Miller at 07:50

Tags: offshore  

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