Mindtree posts healthy Q2 numbers on back of sound growth; outlook positive

Net profit rises 65%, travel & hospitality, hi-tech segments drive growth

Mid-sized IT services company Mindtree on Wednesday posted 65.4 per cent rise in its consolidated net profit at Rs 2.06 billion for the second quarter of the ongoing financial year, on the back of sound growth in travel & hospitality and hitech & media verticals.

Revenues of the Bengaluru-headquartered firm rose 31.8 per cent on year-on-year (y-o-y) basis to Rs 17.55 billion in the September quarter. Sequentially, it grew by 7.1 per cent.

In dollar terms, Mindtree posted $246.4 million in revenues, a growth of 19.5 per cent y-o-y and two per cent sequentially. The IT firm saw constant currency revenue growth of 2.4 on a sequential quarter basis.

“We have reported strong growth during the second quarter with all our key verticals performing well. Out performance in the first half of this year is a lot better than the same period of last fiscal. We are confident that Q3 numbers will largely be in line with Q2 numbers," Rostow Ravanan, CEO & Managing Director at Mindtree, said.

He also said that Mindtree's 'automate-everything' platform-based approach is yielding dividends with winning of larger deals.

In the September quarter, total contract value (TCV) of the deals won by the IT services firm stood at $271 million, which was 31 per cent higher over a year ago period.

"Though there is uncertainty in the macroeconomic environment, our outlook for the fiscal remains positive," Ravanan said.

On the operating margin front, Mindtree witnessed a 130 bps margin expansion to 15.4 per cent in Q2. "The entire gain due to rupee depreciation has been reflected in the bottom line," Ravanan said adding that the company doesn't see any pricing pressure on renewal deals due to weakening rupee.

During the quarter, the travel & hospitality vertical grew 37 per cent YoY, constituting 16.7 per cent of the total revenues. Similarly, BFSI grew 8.2 per cent, while hi-tech & media grew by 25.7 per cent. BFSI contributed 22.4 per cent to total revenue while the share of hi-tech & media stood at 39.3 per cent.

The company added 412 employees on a net basis to take its total headcount to 19,402 by the end of September quarter. The employee attrition rate in the quarter stood at 13 per cent.