Midcap IT shares in demand; Happiest Minds, MphasiS rally over 5%
Shares of midcap information technology (IT) companies were in demand on Wednesday and rallied upto 9 per cent on the BSE in intra-day trade, after Mindtree reported a healthy set of numbers for the quarter ended June 2021 (Q1FY22). Meanwhile, Infosys is scheduled to announce its Q1 results later in the day, while the board of Wipro will meet on Thursday to consider June quarter earnings, as per stock exchange information.
Shares of Mindtree surged 9 per cent to hit a new high of Rs 2,725 in intra-day trade, after the company reported a net profit of Rs 343.4 crore for Q1FY22, an increase of 61.2 per cent year-on-year (YoY). Sequentially, profits grew 8.2 per cent. Broad-based growth across verticals and geographies saw the company’s revenue rise by 20.1 per cent YoY at Rs 2,291.7 crore for the quarter. Quarter-on-quarter (QoQ), the company’s revenue was up 8.6 per cent. In dollar terms, Mindtree’s revenue grew 7.7 per cent sequentially and profit was up by 7.5 per cent.
Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin was at 20.3 per cent, down 166 basis points (bps) QoQ, mainly led by headcount addition. The deal pipeline increased 34.2 per cent QoQ (up 28.9 per cent YoY) to US$504 million. The company added 3,442 employees in the quarter. Offshore effort mix increased 60 bps QoQ to 83.5 per cent.
Since July 2019, after the disruption due to the ownership change, Mindtree has taken steps to stabilize its client and employee count. The management’s increased focus on annuity revenue and tail account rationalization is already reflected in revenue and client mix. A stable outlook for the top account, decent deal signings, and the ability to sustain improved margin are key positives, Motilal Oswal Securities said in result update note.
Among the other individual stocks, Happiest Minds Technologies hit a new high of Rs 1,299, and rallied 9 per cent on the BSE. MphasiS surged 5 per cent to Rs 2,308, followed by Coforge (5 per cent at Rs 4,517), Larsen & Toubro Infotech (4 per cent at Rs 4,165), Wipro (4 per cent at Rs 546.45) and Zensar Technologies (3.6 per cent at Rs 346).
L&T Technology Services, HCL Technologies, Tech Mahindra, Persistent Systems, NIIT and Infosys were up between 1 per cent and 3 per cent on the BSE. At 11:41 am; the S&P BSE IT index and Nifty IT indices were up 2 per cent each, as compared to 0.14 per cent gain in the benchmark indices the S&P BSE Sensex and Nifty50.
Mindtree share price surges post Q1 results; Happiest Minds up over 7%
IT firms Mindtree and Happiest Minds shares surged on Wednesday with shares of Mindtree jumping to a new high of ₹2,721 per share after it reported a healthy set of earnings for Q1FY22. Meanwhile, shares of Happiest Minds Technology was up over 7% to ₹1,276 apiece on the BSE in early deals.
Mindtree’s Q1 net profit rose to ₹343.3 crore, up reported a 61% YoY and 8% QoQ. Its revenue in dollar terms came at $310.5 million, witnessing a growth of 7.7% quarter-on-quarter (QoQ) and 22.6% YoY. The IT company recorded its highest ever order book of half-a-billion US dollars, growth of 34% QoQ.
“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 orderbook 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."
In a note, domestic brokerage and research firm Edelweiss said that Mindtree delivered a strong set of Q1FY22 numbers, in-line with their estimates. ‘‘The company is witnessing accelerated adoption of digital and robust pipeline across industries. We believe strong demand and robust execution will lead to industry leading profitable double-digit growth in FY22,’’ it said.
Edelweiss has maintained its ‘Buy’ rating on the stock and revised its target price to ₹2,850 (from ₹2,821) as it rolls forward to Q3FY23E.
Yes Securities in a note said that Mindtree would continue to make investments to boost growth and is expected to post high teen revenue growth for FY22, while maintaining EBITDA margin of 20%+. The brokerage has an ‘Add’ rating to the stock with target price of ₹2,735 per share (Upside: 9.6%).
ICICI Securities' note stated, ‘‘At 28x FY23E EPS, street is already factoring in mid-teens revenue growth with 20%+ EBITDA margin over the medium term. scope for further surprises/upgrades are less likely. Maintain Hold.’’
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Happiest Minds share: WHOPPING 248% stock returns in 6 months; Know outlook, top triggers and more
Happiest Minds Technologies Limited shares – The stocks of Happiest Minds Technologies Limited were trading in the green on the NSE on Thursday at 12:10 pm. At Rs 1205.90, the stocks were up by 0.7 per cent from the last closing price on Wednesday. This stock also hit its 52-week high of Rs 1247.65 on 2 July 2021. What is ticking for this stock? Zee Business’ Kushal Gupta has this detailed report.
Gupta said that this stock has been constantly in focus. The earnings result over the last two quarters have been strong for the company, he added. The year-on-year (YoY) growth in its net profits for Q4FY21 is at 580 per cent.
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This stock has given around 248 per cent returns and gained almost seven time from the issue price of Rs 166 during its Initial Public Offering (IPO) launch. This movement has been in a six-month span, Gupta said.
He said that the growth triggers are now being seen for FY22. The company has indicated a 20 per cent growth target for this financial year. Happiest Minds Technologies has a strong presence in the OTT segment with Netflix and Amazon as top clients.
The company also tied-up with Coca Cola. Happiest Minds Technologies has its eyes on global Fortune 500 companies, Gupta said. This approach has enabled the company get contracts. The company is expecting its Dollar revenues to grow by at least 15 per cent over the next two years.
Happiest Minds Technologies is also focusing on automation, artificial intelligence and digital. Around 97 per cent of its revenues come from the digital segment, Gupta said. This is the only company in India where 97 per cent revenues come from the digital segment. It is followed by Accenture (70 per cent) and Tech Mahindra (44-47 per cent).
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Meanwhile, for Infosys digital revenues account for 47 per cent, for Wipro it is 42-44 per cent and for Mindtree it is between 38.7-40 per cent.