Mindtree registers subdued earnings, share price hits fresh 52-week low

Shares of IT services firm Mindtree fell in early trade today after it reported 41.4% decline in its net profit at Rs 92.70 crore for the first quarter ended June 30, 2019, compared to Rs 158.20 crore in the same period last year. On a quarter on quarter basis, Mindtree's net profit fell 53.3% owing to lower margin and muted other income.

Mindtree shares opened lower gap down by 7.57% to Rs 695 against the previous closing price of Rs 751.95. The stock price of Mindtree has touched a new 52-week low, after falling 10.23% to the intraday low, against Rs 751.95, its last closing price.

According to data available with exchanges, there was a surge in volumes traded with 3.80 lakh shares and 69.94 lakh shares changing hands on BSE and NSE, both higher than 3, 5 and 10-day average volume traded.

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Moreover, the stock price of Mindtree has fallen over 30% in a year's period, over 15% half yearly, and over 5% in the last week, respectively. It trades lower than 30, 50, 150 and 200-day moving average price of the stock.

While the revenue of the IT services company rose 11.9% year-on-year (YoY), company's operating profit or earnings before interest, tax, depreciation and amortisation (EBITDA) slipped 20.3%. Mindtree's attrition rate was 15.1% in the last twelve months.

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Mindtree expects FY20E revenue to grow above industry growth rate, while adjusted margin is likely to expand aided by improving revenue growth from 2QFY20 onwards, operational efficiency and favourable digital deal pricing.

Whereas Kotak Institutional Equities, BNP Paribas maintained reduce rating on Mindtree and see co's business volatility continuing for longer,  Reliance Research assigned HOLD recommendation with a target price of Rs 740 to the stock.

Mindtree now under the bigger tree of L&T, says CEO Subrahmanyan at the AGM

"With new promoter L&T taking charge, Mindtree's senior management team has resigned. Despite healthy deal wins during the quarter, steeper-than-expected margin contraction indicates a lackadaisical beginning of the fiscal," quoted Reliance Research in their Market Lens copy.

Mindtree share price currently trades at Rs 690.45 on BSE and NSE, respectively.

Edited by Rupa Burman Roy