The midcap IT firm Mindtree on Wednesday registered a 3.2 per cent sequential growth in constant currency terms with a revenue of $271 million for the September quarter of financial year 2019/20. It was the first quarter under the new L&T-led leadership.
The Bengaluru-based IT services firm reported 43.5 per cent quarter-on-quarter growth in the net profit at $19.2 million. It was a decline of 34.1 per cent year-on-year. The growth was broad-based, said CEO Debashis Chatterjee, and is an indication of a robust relationship with clients and partners. "Our focus will now shift to profitability that will give us room for margin expansion," he said.
Mindtree's BFSI vertical grew 2.8 per cent sequentially, while travel and hospitality and hi-tech and media verticals grew by 3.3 per cent and 3.8 per cent, respectively. However, growth in retail, consumer packaged goods (CPG) and manufacturing remained flat.
"We have done well in the insurance bit of BFSI and some of the tier-2 bank clients have also done well," said Chatterjee. The company also saw its operating margins expand by 40 bps to 13 per cent from 12.6 per cent in the previous quarter excluding one-off gains. "We had an improvement of 140 bps in operational efficiency and 50 bps in forex gains, neutralising the second cycle of compensation hike of 150 bps," said Pradeep Menon, CFO, Mindtree.
The company clarified that the recent amendments in the tax rates will not have any impact on the effective tax rate as it operates in tax holiday zones. The company expects operating margins to further improve in the second half of the financial year. "We have enough action in terms of ramping up of existing deals and utilisation improvement that gives us confidence on margin improvement," added Menon.
Effectively completing his first full quarter of operations, CEO Chatterjee said that after having met most of company's clients, several deals that had earlier slowed down due to uncertainties have also begun to open up. "The deal pipeline looks healthy and the deal closure in the first half will set the stage for future growth," he added.