Mid-tier IT services company Mindtree reported strong revenue growth, meeting the street estimates. It also maintained the growth of EBIT margins even as the broader IT services market failed to hold up. 

For the quarter ended June 30, the firm reported revenue of ₹3121.1 crore, a quarter-on-quarter(QoQ) growth of 7.7 per cent. This is the firm’s sixth consecutive quarter of more than 5 per cent revenue growth in constant currency terms. On a year-on-year(YoY) basis, a 36.2 per cent increase was recorded. 

However, the net profit for the period stood at ₹4,71.6 crore, a sequential decline of 0.3 per cent QoQ but a growth of 37.3 per cent YoY.  In dollar terms, the revenue recorded was $399.3 million, a QoQ growth of 4 per cent and a 28.6 per cent growth YoY. The net profit recorded for the period was $60.3 million, a decline of 3.8 per cent QoQ, but a hike of 29.7 per cent YoY. 

Debashis Chatterjee, Chief Executive Officer and Managing Director, Mindtree, said, “We are excited to report a strong start to FY23 with robust revenue growth, solid margin, and a record order book, demonstrating our continued industry-leading growth momentum.” The revenues are up on the back of a healthy demand for digital capabilities, he added. 

Margin and order book

Mindtree posted an EBIT margin of 19.2 per cent for the quarter, compared to 18.9 per cent in the last quarter. The numbers largely met the market expectation and has come at a time when other players in the sector are seeing a dip in margins due to increased employee and travel costs. 

Chatterjee added,“the EBITDA was 21.1 per cent, underscoring the firm’s disciplined execution and operational rigor. The highest-ever order book of $570 million reflects the relevance of the value proposition in delivering business-critical transformation at scale.”

The company had 37,455 employees at the end of June quarter, the trailing 12-months attrition was at 24.5 per cent. The total active client tally stood at 274 for the quarter. 

Ahead of the earnings call, Mindtree shares traded higher by 1.54 per cent at ₹2,899.35 apiece on Bombay Stock Exchange (BSE). In contrast, the Nifty IT index was down by 0.42 per cent at close. 

Omkar Tanksale, research analyst at Axis Securities, told BusinessLine, “Mid cap IT companies are likely to perform better than blue chip companies as their contract sizes are lower and growth is on a lower base.” Mindtree’s performance, however, has to be attributed to its execution, he added.

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