Mindtree Q1 profit up 37%, reports all-time high order book of $570 million

Mindtree Ltd’s net profit for the June quarter rose 37.3% annually to ₹471.6 crore driven by growth in revenues and various operational efficiency parameters and increased utilisation.  

The Bengaluru-based IT services company’s revenue for the first quarter stood at ₹3,121 crore, up 36.2% on a year-on-year basis driven by healthy demand for its digital capabilities. On a sequential basis, revenues grew 7.7%.  

Mindtree’s dollar revenue stood at $399.3 million, up 5.5% sequentially in constant currency making it the company’s sixth consecutive quarter of more than 5% revenue growth in constant currency. The total contract value of deals stood at an all-time high of $570 million.  

Commenting on the impact of the macro-economic uncertainties, Debashis Chatterjee, chief executive officer and managing director of Mindtree said, “There has been no significant change in client behaviour but we are closely monitoring the situation. The growth momentum looks robust for the first half of the fiscal and we will wait and watch for the second half.”  

Mindtree’s EBITDA margins expanded to 21.1% from 20.9% in the preceding three months due to operating efficiencies and currency benefits. 

Analysts believe Mindtree’s performance has been steady. “Strong deal wins, healthy hiring momentum, and strong revenue growth despite weakness in RCM (Retail, Consumer Products and Manufacturing) point towards strong near-term demand. Impressed with margin beat amidst high supply side pressures for the industry,” said Aditi Patil, Research Associate at Prabhudas Lilladher.  

The attrition rate for the June quarter increased to 24.5% from 23.8% in the preceding three months indicating strong demand for technology professionals in the industry. “It will take a few more quarters for the attrition to stabilize,” Chatterjee said. Mindtree made a gross addition of 4,700 employees in the June quarter taking the total headcount to 37,455 employees as of 30 June.  

Earlier this year, Larsen and Toubro Infotech (LTI) and Mindtree, the two publicly traded units of India’s largest engineering company, agreed to merge to form ‘LTIMindtree’, poised to become India’s sixth largest IT services company by revenue and fifth in terms of market capitalisation. The merger, expected to be completed by the end of this fiscal, will create an entity with combined sales of $3.5 billion that will be able to bid for bigger orders and offer a wider range of services to clients, given larger customers’ preference for hiring fewer vendors that can offer end-to-end services. Mindtree’s Chatterjee will lead the combined entity after the merger.  

IT companies have been making acquisitions to strengthen their capabilities in cloud, the key driver of digital transformation projects. Last year, Mindtree acquired NxT Digital business of L&T Group to enhance its cloud-based internet of things (IoT) and artificial intelligence (AI) capabilities for industry 4.0. LTI also acquired PowerUp Cloud in 2019 through which it has set its ambitions on a $1 billion cloud practice.