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Mindtree shares rise ahead of Q1 results; here’s what to expect

“Delay in deal closure owing to L&T's hostile bid impacted growth,” said Centrum.

ETMarkets.com|
Updated: Jul 17, 2019, 03.50 PM IST
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Mindtree chairman, vice-chairman , CEO resign
Market participants should focus on growth outlook from top clients, management changes due to LTI acquisition and clarity over the integration of verticals and business.
Shares of Mindtree were trading higher in Wednesday's morning session ahead of its financial results for the quarter ended June 2019.

An assessment by Centrum Institutional Research showed that the midcap IT firm may report flat bottomline growth on a year-on-year basis. It projected that the net profit of the company may inch higher by 0.1 per cent on YoY basis to Rs 169.20 crore in Q1FY20. However, it may post 14.70 per cent fall in net profit on QoQ basis.

The brokerage house also estimated 10.20 per cent YoY rise in EBITDA on 13.30 per cent YoY jump in revenue in Q1FY20.

“Delay in deal closure owing to L&T's hostile bid impacted growth,” Centrum said in a report.

Market participants should focus on growth outlook from top clients, management changes due to LTI acquisition and clarity over the integration of verticals and business.

Brokerage firm Prabhudas Lilladher expects flat growth of 1 per cent QoQ USD (1.2 per cent QoQ CC) from Mindtree due to pressure from top client and disturbance from LTI’s bid.

“We expect EBIT margins to decline around 150 bps QoQ, due to the impact of wage hikes, visa costs and rupee appreciation. We expect weak deal wins and soft TCV as uncertainty arising from LTI deal will delay client decisions,” Prabhudas Lilladher said in a report.

After acquiring Mindtree in a hostile takeover, Larsen and Toubro (L&T) on Tuesday sought to ease investor concerns, saying it can provide further impetus to the IT company’s growth by way of board-level oversight and relevant client connects.

Addressing the shareholders of Mindtree for the first time after the takeover, L&T CEO and MD S N Subrahmanyan said the IT firm would be operated at arm’s length from the group’s entities, according to PTI.

“L&T can provide further impetus to long-term growth of Mindtree by way of board-level oversight and relevant client connects. We will be able to harness these relationships for the benefit of Mindtree's stakeholders... L&T plans to leverage its 360-degree relationship with clients for accelerated growth of Mindtree,” he noted.

The shares of the company closed 0.35 per cent higher at Rs 751.95 on BSE.
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