Mindtree shares dropped as much as 5.64 per cent in early trade on Monday after the IT company on Friday post market hours reported 23.24 per cent fall in net profit at Rs 94.80 crore for the quarter ended September 2016 against Rs 123.50 crore in the sequential quarter ended June 30, 2016. Gross sales of the company declined by 2.43 per cent quarter-on-quarter to Rs 1,295.40 crore for the quarter under review.
At 10.20 am, shares of Mindtree were trading 4.82 per cent up at Rs 456. The scrip opened the day at Rs 458 and had touched a high and low of Rs 464.60 and Rs 452.10, respectively, in trade so far. Benchmark BSE Sensex was up 45.65 points at 28,122.83.
Mindtree had already warned of its revenue in the second quarter to be lower than the first quarter, impacted by cross-currency movements, project cancellations and slower ramp-ups in a few large clients across different verticals.
Consolidated operating profit of Mindtree slipped 16.66 per cent on quarter-on-quarter basis to Rs 179.10 crore for the quarter under review. It had reported a consolidated operating profit of Rs 214.90 crore in the sequential quarter ended June 30, 2016.
Reliance Securities in a research note said, “Mindtree delivered a disastrous performance in 2QFY17, which is unquestionably its worst performance in many quarters. All metrics – revenue, margins and net profit – were way below our estimates. Outlook for 3QFY17E implies flattish revenue, albeit given the dynamic business environment, this could change soon. Mindtree’s shocking 2QFY17 report, unconvincing outlook, client-specific issues, worsening order book metrics and continuing margin pressures lead 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 poor margin performance, we slash our EBITDA margin estimates by 200-240 basis points. We downgrade our recommendation on the stock to ‘Reduce’ from ‘Hold’ with a revised target price of Rs 430 (Rs 521 earlier).”