Mindtree Q1 net profit increases 37% at Rs 472 cr; revenue rises 36%

Mid-cap IT services firm Mindtree on Wednesday reported net profit of Rs 472 crore, up 37 per cent year-on-year, in the June quarter. But the company's PAT was down 0.3 per cent sequentially.

Revenue for the quarter grew 36.2 per cent y-o-y at Rs 3,121 crore for the first quarter of FY23. Revenue was up 7.7 per cent on a quarter-on-quarter basis. The company signed a total contract value of $570 million during the quarter, the highest ever for the company.

The company said that this was the sixth consecutive quarter of more than 5 per cent revenue growth in constant currency. Revenue in US dollar terms, at $399.3 million, grew 5.5 per cent sequentially.

The management was confident on its commentary on growth for the fiscal and added that they were "cautiously optimistic" about the global economy, especially for the H2 of this fiscal year.

“While there is no indication of any significant change in client behavior, we are closely watching the macroeconomic developments and continue to be cautiously optimistic about our opportunities, the opportunities created by the need to balance costs and digital imperatives with an eye on the future,” said Debashis Chatterjee, Chief Executive Officer and Managing Director, Mindtree.

The cautious commentary came from the company as its retail, CPG and manufacturing (RCM) vertical saw a dip of 8.7 per cent sequentially due to forex impact and softness in some of the pockets in these verticals. Hence, though the first half of the year was looking good, the management was cautious on H2FY23. “Some of our clients have businesses in Russia and Ukraine, which has been impacted and secondly the supply chain that got impacted due to the European crisis as well as the China lockdown,” added Chatterjee.

"Performance is good on all fronts. Strong deal wins, healthy hiring momentum and strong revenue growth despite weakness in RCM point towards strong near term demand. Impressed with margin beat amidst high supply side pressures for the industry," said Aditi Patil, research associate, Prabhudas Lilladher, in her first cut analysis.

Attrition for the quarter came in at 24.5 per cent. This was up from 23.8 per cent in the preceding quarter and higher than the 13.7 per cent reported in Q1FY22. The company added more than 4,700 employees in the quarter. Despite higher attrition the company managed to improve its EBIDTA, which was up 8.2 per cent QoQ, unlike the larger peers who have seen their margins drop.

The company said that growth was broad based across geographies and industry segments. North America business grew by 28.9 per cent yoy, Continental European business was up 17.8 per cent and UK & Ireland business was up 14 per cent on an annual basis.

On Mindtree-L&T Infotech merger, the management said that the merger is on track, with the first steps being clearing the regulatory hurdles.

“We have received the no objection letter from the stock exchanges on June 22. The merger is now awaiting other regulatory approvals,” said Chatterjee. A steering committee has also been set up and is meeting regularly to oversee the integration plans.

He also added that the synergies between Mindtree and LTI is already producing results and in this quarter has allowed them to win a large deal from a large European-based travel technology company.