Mid-size company Mindtree has reported a decline in profitability due to some of its clients deferring technology spending as a result of global macroeconomic uncertainties.
The company reported a reduction in net profit of ₹123.5 crore for the first quarter ended June 30, down 7.1 per cent compared with ₹133 crore in the same period last year. The profitability was impacted due to a combination of factors but largely due to slow ramp-ups by some of its clients.
“The global uncertainty triggered by Brexit is making clients to delay decision making,” Rostow Ravanan, CEO and MD, Mindtree, told
On hearing the news, Mindtree shares fell 3.76 per cent and closed at ₹613 on the BSE.
However, the Bengaluru-based company is confident of beating Nasscom revenue growth estimates of 10-12 per cent for the 2017 fiscal. However, while Mindtree does not give annual guidance, Ravanan cautioned that 2017 fiscal will be an uneven year of quarterly growth. Revenues for the first quarter, on a sequential basis stood at ₹1,327 crore, up marginally by 0.53 per cent in comparison to the March ended quarter when revenues were ₹1,320 crore. Revenue in dollar terms rose 1.7 per cent to $199 million from $195.6 million in the same period. When compared on a year-on-year basis, revenues went up 35.8 per cent.
The company’s margins also went down to 14.7 per cent from 16.7 per cent. This, the management said, was largely due to wage hikes, visa costs and a loss in one if its subsidiary Bluefin solutions, a company which it acquired a year ago. “Visa costs impacted 1 per cent and loss from Bluefin had a 0.8 per cent impact,” said Ravanan.
Mindtree rolled out annual hikes of 8-10 per cent for its offshore employees and 2-4 per cent for onsite workers, in line with the industry. Mindtree also said that the trailing 12-month attrition rate stood at 16.5 per cent in the June ended quarter.