InvestorQ : Why did Mindtree dip so sharply despite good results on Thursday?
Juvina Maggie made post

Why did Mindtree dip so sharply despite good results on Thursday?

Deepa Salunkhe answered.
7 months ago

A day after reporting good results, the stock of Mindtree slumped 11.43% as the company had missed analyst estimates on the revenue front. The numbers were actually higher sharply on a yoy basis but that was more due to the pressures creating a low base last year.

For the Sep-20 quarter, Mindtree posted net profit of Rs254 crore, a growth of nearly 88% on a yoy basis. Even on a sequential basis, the profits were up by nearly 20%. Revenues for the quarter remained flat at Rs.1926 crore

The operating margin of Mindtree was higher by 140 basis points sequentially at 19.6%. While this number is better than the street consensus, it is still way below the OPM that the large IT companies in the big league normally report.

Some large brokers like Motilal Oswal have also downgraded the stock to neutral with a more neutral price target. They are apprehensive of the persistent weakness in the Top tier clients, where the pricing is definitely not favorable for the company. Hospitality has taken a hit.

The good news for Mindtree is that it has a whopping 40% exposure to the fastest-growing hi-tech space and the internal belief is that the worst for the travel and hospitality sector may be behind them giving them hope for the future.