Mindtree net profit up 61%

Midsize IT firm ’s first quarter profit rose 61.2% to Rs 343.4 crore, while revenue climbed 20.1% to Rs 2,291.7 crore on record deals from clients investing in technology to transform their businesses.

Mindtree won orders worth over $504 million in the April-June period, the highest ever in a three-month period for the Bengaluru-based company.

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

“Our highest-ever order book of $504 million affirms that the focused execution of our strategy and our client-centricity in re-imagining business models for the digital era are helping us drive profitable and sustainable growth.”

Its total order book increased by 34.2% over the previous quarter, pointing to an increase in demand across verticals, Chatterjee said.

Mindtree is majority owned by diversified conglomerate Larsen and Toubro.

In dollar terms, profits were up 64.7% at $46.5 million, while revenue rose 22.6% to $310.5 million.

The company expects double-digit growth to continue in the next few quarters as well on the back of a strong deal pipeline and increase in digital projects across industries.

“The new deals are a mix of annuity and transformation deals. The growth momentum is evident with all the sectors growing sequentially during the quarter,” Chatterjee said.

Analysts expect Mindtree to grow in double digits in the year ahead though concerns remain on margins due to higher demand for talent across the IT industry.

“Going ahead, strong order book provides a good visibility of double-digit revenue growth over FY22 but rising attrition may weigh on EBIT margin. Though revenue contribution from top client declined marginally to 27.4%, it is still high compared to mid-cap peer group,” said Suyog Kulkarni, Senior Research Analyst at Reliance Securities, in a note.

Mindtree had 260 active clients as of June 30 and added three new $5 million clients during the quarter.

Its total headcount at the end of the period stood at 27,256 with a net addition of 3,442 people.

The trailing 12-month attrition rate at the end of the quarter stood at 13.7%.

Chatterjee said the company would continue to hire to meet increased demand for talent.

Mindtree will also roll out a second round of salary increases for certain employees during this quarter.

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