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    Mindtree drops 6% post shocking Q2 numbers; here’s what analysts say

    Synopsis

    Mindtree’s results were weak on all fronts and fare much worse than the mid quarter warning issued by the company, said Emkay Global in a note.

    ETMarkets.com
    NEW DELHI: Shares of Mindtree tumbled nearly 6 per cent in Monday's trade after the company said its second quarter revenue declined 3 per cent sequentially on delayed spending decisions by clients. The stock tanked 5.63 per cent to hit a low of Rs 452.10 on BSE.

    “Mindtree’s shocking Q2 numbers, unconvincing outlook, client-specific issues, worsening order book metrics and continuing margin pressures led us to maintain our negative stance on the stock. We slash our EPS estimates substantially by 14-17 per cent, even as we cut revenue estimates by 2-3 per cent. Given the poor margin performance, we slash our Ebitda margin estimates by 200-240 bps. We downgrade our recommendation on the stock to 'reduce' from 'hold' with a revised target price of Rs 430,” Reliance Securities said in a note.

    The brokerage had a target price of Rs 521 on the stock before results. Mindtree’s revenue dropped 3 per cent QoQ to $193 million during the quarter, while its bottom line plunged 23.6 per cent to $14.1 million. In rupee terms, the company reported revenue of Rs 1,295.40 crore and a net profit of Rs 94.80 crore.

    Mindtree’s results were weak on all fronts and fare much worse than the mid quarter warning issued by the company, said Emkay Global in a note.

    “We see at least 5-6 per cent upfront cut to our FY17/18/19E EPS of Rs 29.5/Rs 36/Rs 44, respectively. Mindtree’s recent struggles vindicate our 18-month-old thesis of risks to its premium valuations with skewed growth. It seems to be reflected in the recent struggles. We currently have a reduce rating on Mindtree with a target price of Rs 490,” the brokerage said.

    The mid-sized IT company had in September warned of a drop in revenue and margins due to cross-currency movements, project cancellations and slower rampups in a few large clients across verticals and continued weakness in UK-based subsidiary Bluefin.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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