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HDFC Securities Institutional Equities
Mindtree Ltd. delivered in-line revenue while margin was better than our estimate in Q1, supported by flat sub-contracting. The sequential growth of 5.5% constant currency followed the sixth consecutive quarter of 5% plus sequential growth, supported by broad-based momentum across service lines. Key positives include-
consistency in delivering industry-leading growth more than 5% QoQ CC,
strong credentials in hi-tech and travel vertical (airlines and hospitality exceeding pre-Covid levels),
healthy total contract bookings with TCV growth of 13% YoY,
focus on building full stack services and client rationalisation (focus on 100 accounts that contribute 90% of the total revenue), and
stable sub-contracting expenses (9.6% of the revenue in Q1 versus 10.2% in FY22).
We expect Mindtree to deliver a high-teens growth compound annual growth rate in FY22-24E, supported by expansion into Continental Europe and core portfolio focus (cross-sell), with predictable margins (management maintained 20% plus Ebitdam outlook).
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