Mindtree stock falls over five per cent ahead of Q4 earnings, here's what to expect

Shares of Mindtree fell over 5  per cent ahead of the IT firm's Q4 earnings set to be announced today. The large cap stock opened 2.62  per cent lower at Rs 3,990 against the previous close of Rs 4,097 on BSE. Mindtree shares further slipped 5.5  per cent to Rs 3,872 in early trade.

Mindtree stock is trading lower than 5-day, 20-day, 50-day, 100-day and 200-day moving averages. The stock has gained 88.62  per cent in one year and fallen 18.41  per cent in 2022.

Total 0.29 lakh shares of the firm changed hands amounting to a turnover of Rs 11.56 crore on BSE. Market cap of the firm fell to Rs 64,342 crore on BSE.

The stock hit a 52-week high of Rs 5,059.15 on November 11, 2021 and a 52-week low of Rs 1,978.75 on April 15, 2021.

According to an earnings preview by YES Securities, the IT firm is likely to post a 36.02  per cent year-on-year (Y-o-Y) rise in revenue at Rs 28,728 crore. On a sequential basis, revenue climbed 4.5 per cent.

Net profit is expected to rise 42 per cent to Rs 4,507 crore in the fourth quarter and climb 3 per cent on a quarter on quarter-on-quarter basis.

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Earnings before interest, taxes, depreciation, and amortisation are likely to fall by 73 basis points (Y-o-Y) to Rs 6,090 crore, said YES Securities.

The brokerage said growth for the IT firm is to be led by hitech and travel verticals. Commentary on attrition and deal win momentum will be key to watch out for.

ICICI Securities in a report said the IT firm is likely to post net profit of Rs 1608.5 crore in the last fiscal against Rs 1108.3 crore profit for the fiscal ended March 2021.

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The brokerage has assigned hold rating to the stock.

"It is one of the few companies firing on both the engines, viz. strong sustainable growth, and steady increase in margins. We assign an HOLD rating to Mindtree with target multiple of 32x on FY24E EPS to arrive at a target price of Rs 4,266. We expect backended returns given rich valuations," said ICICI  Securities.

HDFC Securities sees a 33.8 per cent (Y-o-Y) rise in sales at $386 million in Q4.  On a quarter on quarter (Q-o-Q) basis, sales is seen climbing 5.3 per cent.

Profit after tax is expected to climb 40 per cent (Y-o-Y) to Rs 444 crore and 1.5 per cent on a (Q-o-Q) basis.

For the quarter ended December 2021, the IT services company posted a 34 per cent rise in consolidated net profit at Rs 437 crore against Rs 326 crore logged in the same period last year.

Revenue from operations rose 35.89 per cent to Rs 2,750 crore in Q3 against Rs 2,023 crore in the same period last year. Earnings before interest and taxes (EBIT) came in at Rs 528.9 crore, a margin of 19 per cent.

Mindtree is an international information technology consulting and implementation company that delivers business solutions through global software development. The company operates through four business segments: Retail, consumer packaged goods (CPG) and manufacturing (RCM), banking, financial services and insurance (BFSI), communications, media and technology (CMT), and travel and hospitality (TH).