A Peek Within: Mindtree

Mindtree: Climbing the value chain

The stock of mid-tier IT player Mindtree has been on a tear, up over 29 per cent in the last one month and 17 per cent in just the past week. A part of the rally can be explained by the re-rating that shares of quality IT companies have witnessed over the past six months.

Mindtree’s March quarter results too gave investors much to cheer about. Revenues (in dollar terms) during the period grew at a healthy 15.6 per cent over the fourth quarter of FY-17, higher than most other IT companies that have reported their numbers so far.

What has specifically been encouraging is the fact that a healthy 42 per cent of its overall sales comes from digital revenues. This proportion is among the highest in the entire Indian software services industry. Volumes (billed hours) and deal wins too have been healthy for the company.

But valuations may have gone into the expensive zone, what with the Mindtree stock trading at 28 times its per share trailing 12 months earnings.


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