In a bid to expand its client base and add more projects, the company is set on a reskilling programme, which has also weeded out some employees, resulting in a higher attrition rate despite an overall increase in the number of employees.
By Srinath Srinivasan
IT firm Mindtree on Wednesday posted its Q2 FY20 earnings, in line with Street expectations, with 3.2% sequential growth and 11 % y-o-y growth in constant currency terms, at $271 million. Net profit stood at $19.2 million, a 43.5% sequential growth.
In rupees terms, the profits were down 34.6% y-o-y at `135 crore. “Foreign exchange, increase in remuneration year on year have affected our net profit. It will improve in the forthcoming quarters,” said Debashis Chatterjee, CEO of Mindtree. The company reported an operating margin of 13% for the quarter ended September 30, a 300 bps growth from the 10.3% in the previous quarter. Without mentioning an exact range, the CFO of mindtree, Pradip Menon, said that the Q3 operating margin will be better than in Q2, and continue with a sequential growth in Q4.
Growth in digital remained flat at 38% from the previous quarter, while the infrastructure management and tech support business division grew to 24.6% from 23.8% sequentially. However, digital has grown 18% y-o-y. Hi-tech and media continue to be the highest growth drivers for Mindtree with 39.8% revenue share, followed by retail-CPG-manufacturing and BFSI at 21.7% and 21.6% , respectively.
The number of active clients has gone down to 343 during the quarter ended September 30, with only one client coming into the the $5-million bucket, taking the total size of the bucket to 47. In the quarter before, there were 346 active clients and 46 $5-million clients. The overall employee count went up to 21,267 during Q2 FY20 from 20,935 at the end of Q1 FY20. However, for the last 12 months, the attrition rate rose by 1.4 % to 16.5%.
The US continues to be the largest market, contributing 73.7% to the overall company’s revenue. In a bid to expand its client base and add more projects, the company is set on a reskilling programme, which has also weeded out some employees, resulting in a higher attrition rate despite an overall increase in the number of employees.
“Deal pipeline looks healthy in the coming quarters and we will strengthen our execution and drive shareholder value,” said Chatterjee. With a relatively strong quarter ended September 30, the company has announced a dividend of `3 per equity share with a face value of `10 each.