Mindtree Q1 revenue up 30.2%

First quarter net profit declines 4.4%

Mid-size information-technology (IT) services provider Mindtree on Thursday reported a 4.4 per cent year-on-year decline in net profit for April-June 2014  at Rs 129.4 crore, even as its revenue increased a robust 30.2 per cent to Rs 843.5 crore.

Net profit during the quarter was lower mainly as foreign exchange gains of the company fell to $2.3 million (around Rs 13.8 crore) in the first quarter, against $11.2 million (around Rs 67.4 crore) in the corresponding quarter of the previous financial year.

On a sequential basis, net profit went up by 32.5 per cent aided by the foreign exchange gain against a foreign exchange loss of $7 million in January-March 2014. Revenue was up 2.4 per cent, sequentially.

Operating profit margins of the company fell 150 basis points in Q1FY2015 from a quarter ago to 20.4% mainly because of foreign exchange headwinds and high costs of visa.

Earnings during Q1FY2015 were aided by a broad-based growth across sectors, with hi-tech and media services, and travel and hospitality verticals witnessing a strong growth.

"We are seeing good traction with clients through multi-year, multi-million dollar deals, said Krishnakumar Natarajan, CEO and MD of Mindtree. "Apart from strong demand across the traditional service lines, we are now getting picked up as the lead partner for digital by many Fortune 100 customers," he added.

Even as the deal pipeline and order inflow looks robust, the company cautioned that revenue growth during July-September 2014 (Q2FY2015) may be lower than Q1FY2015.

"We are not seeing any slowdown on demand or any other such issues. All we want to say is that it is hard to maintain this high level of growth and so it may be lower in the next quarter," Natarajan said. He added that growth during Q1FY2015 was largely Intellectual Property (IP)-led, which is lumpy in nature and may not grow as much in the subsequent quarters.

The Bangalore-based company reiterated that it is confident of beating industry body Nasscom's revenue growth guidance of 13-15% for the IT services sector in FY15.

Mindtree added 516 clients during the quarter on gross basis, while its attrition was at 14.2% during the quarter.