MindTree Consulting
BSE SENSEX
27,747
S&P CNX
8,509
18 July 2016
Q1FY17 Results Update | Sector: Technology
CMP: INR614
TP: INR600(-2%)
Neutral
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Significant margin miss mars outlook
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm/ Vol ‘000
Free float (%)
MTCL IN
167.8
122.7 / 1.8
804 / 601
-7/-28/-1
340
86.3
Financials & Valuation (INR b)
Y/E Mar
2016 2017E 2018E
46.9
56.1
65.7
Net Sales
8.3
8.7
11.2
EBITDA
6.0
5.5
7.1
PAT
35.9
32.5
42.5
EPS (INR)
12.4
-9.4
30.9
Gr. (%)
142.4 161.2 189.3
BV/Sh (INR)
27.4
21.4
24.3
RoE (%)
30.6
24.9
30.0
RoCE (%)
17.1
18.9
14.4
P/E (x)
4.3
3.8
3.2
P/BV (x)
Estimate change
TP change
Rating change
Softness in revenue growth…:
MTCL’s 1QFY17 CC growth of 1.1% QoQ was
below our estimate of 2% on account of delays in project commencement and
decline in revenue from Bluefin (led by uncertainty in the UK). Deal wins
remained strong with TCV of USD220m. Yet, delayed ramp-up and client-
specific issues are expected to keep revival at bay for another quarter.
…And severe miss on profitability…:
Margins declined by 200bp QoQ to 14.7%
(v/s our estimate of flat margins) despite a 200bp QoQ improvement in
utilization. Incremental pressure over and above the visa expenses came from
continued onsite shift (+190bp QoQ) and revenue and profitability decline in
Bluefin more than offset any efficiency improvement.
…All
but rule out FY17 margin expansion:
MTCL expressed confidence in
growing FY17 revenues at a rate higher than industry. Despite the ~4.5% of
incremental revenue contribution in FY17 by acquisitions, the ask rate for the
2H works out to ~3.2% for ~15% revenue growth, after 2Q, which is expected
to be another soft quarter. MTCL also has held on to its aspiration of expanding
margins in FY17. However, following 200bp decline in 1Q, and impending
200bp headwind from wage hike in 2Q, likelihood of reaching 17.5% full year
margin appear all but over, with 1HFY17E margins at 14.7%.
Valuation view:
We have cut our revenue estimate by 1% for FY17/18E each.
However, we have toned down our EBITDA margin estimates for FY17 / FY18 to
15.5% / 17%, down 230bp / 150bp. While MTCL is our preferred business
model in tier-II IT from a long term perspective for its strong Digital play, our
expectation of upward bias to margins is thwarted by continued onsite ramp
and another year of profitability decline nearly a given. Our target price of
INR600 now discounts FY18E earnings by 14x (v/s 15x earlier). Restoration of
higher multiple will be a function of addressing the duality of growth-margin
softness. Maintain Neutral.
*IND-AS. Rest of the quarters are in I-GAAP. Impact of IND-AS on revenue is to the extent of -0.4% on revenue, -30bp on EBITDA margin and
-1.3% on PAT margin
Ashish Chopra
(Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530
Sagar Lele
(Sagar.Lele@MotilalOswal.com); +91 22 6129 1531
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

MindTree Consulting
Growth below estimates because of Bluefin and project delays
MTCL reported 1.1% QoQ CC growth in 1Q, below our estimate of 2% QoQ CC.
Revenue growth was lower during the quarter on account of [1] Delays in ramp
up of a couple of projects, [2] Pricing pressure in traditional services due to
competition and [3] Decline in revenue from Bluefin on account of uncertainties
in the UK.
In reported terms, revenue grew 2% QoQ to USD199m, against our expectation
of 2.5% QoQ growth (USD200m).
Exhibit 1: Revenue growth marginally below estimate
Revenue (USD m)
6.4
4.5
2.5
117.7 124.0 127.1 132.8 141.3 147.0
4.0
147.7 147.8
0.5
0.1
4.4
2.3
QoQ Growth (%)
8.1
4.2
5.4
5.7
2.1
154.3 166.8 184.4 195.0 199.0
*IND-AS. Rest of the quarters are in I-GAAP. Impact of IND-AS on revenue is to the extent of -0.4% on
revenue, -30bp on EBITDA margin and -1.3% on PAT margin
Source: MOSL, Company
Deal wins and Digital continue displaying strength
MTCL won USD220m TCV worth of deals in 1QFY17, which compares with an
average TCV of USD221m in FY16. The average TCV of deal wins in FY15 was
USD162m.
Of the deal wins during the quarter, USD36m were fresh intake while USD184m
were renewals. Out of these USD209m is expected to be executed within a year
and USD11m beyond that.
Of the deals, Digital accounted for USD93m (42% of TCV) in 1Q. The composition
of Digital is higher compared to FY16, where Digital accounted for 37% of the
total deals won.
Digital business grew by 5.2% QoQ and 47.8% YoY during 1QFY17. Digital now
constitutes to 40% of total revenue.
Profitability: EBITDA margins significantly below estimates
EBITDA margin for the quarter was 14.7%, -200bp QoQ, which is significantly
below our estimate of flattish margins at ~17%. Margins were impacted by [1]
Visa expenses (-100bp), [2] Revenue and profitability decline in Bluefin (-50bp)
and [3] Onsite shift, improved utilization, currency movement and pricing
decline together (-50bp)
Gross margin declined by 100bp QoQ to 37%, and SGA was up 100bp QoQ at
22.3; leading to the 200bp decline in EBITDA margin sequentially.
18 July 2016
2

MindTree Consulting
Exhibit 2: EBITDA margin decline of 200bp QoQ
EBITDA margin (%)
22.6
21.4
21.3
19.4
22.2
21.8
21.8
21.7
24.0
SGA (%)
22.8
22.6
21.3
22.3
18.4
20.8
19.5
21.5
20.0
19.8
20.5
19.5
17.1
18.5
17.7
16.7
14.7
*IND-AS. Rest of the quarters are in I-GAAP. Impact of IND-AS on revenue is to the extent of -0.4% on
revenue, -30bp on EBITDA margin and -1.3% on PAT margin
Source: MOSL, Company
Utilization excluding trainees was up 140bp to 72% while utilization including
trainees was up 200bp QoQ to 71.4%. There was net decline of 513 employees
during the quarter.
Utilization
Incl. Trainees (%)
Excl. Trainees (%)
Exhibit 3: Utilization incl. trainees up by 200bp
76
70
64
Source: MOSL, Company
Onsite volume growth was 5.1% QoQ (versus 1.6% QoQ offshore), and
composition of revenue shifted to onsite by 190bp to 59.5% in 1QFY17 (48.1% in
1QFY16; 1,140bp YoY).
Exhibit 4: Onsite composition has increased heavily in the last few quarters
Onsite (% of revenue)
Offshore (% of revenue)
61%
39%
59%
41%
57%
43%
56%
44%
56%
44%
54%
46%
54%
46%
53%
47%
52%
48%
48%
52%
46%
55%
42%
58%
41%
60%
Source: MOSL, Company
Under IND-AS, the acquired entity’s identifiable assets, liabilities and contingent
liabilities are recognized at fair values at the acquisition date. This has resulted
18 July 2016
3

MindTree Consulting
in recognition of intangible assets and consequent amortization of intangibles in
the income statement.
On account of this, MTCL recognized an amortization expense of INR132m
during the quarter; leading to total depreciation and amortization expense of
INR468m (compared to INR348m in 4Q). This caused the maximum impact on
PAT led by the shift to IND-AS. Impact on PAT was ~10% due to the additional
expense.
PAT for the quarter was INR1,235m, -7.2% QoQ. Our PAT estimate won’t be
comparable to this since we didn’t factor any amortization expense.
I-GAAP
13,242
-10,983
-348
-1
62
Ind-AS
13,203
-10,997
-475
-63
74
Difference
-39
-14
-127
-62
12
-230
Source: MOSL, Company
Exhibit 5: Impact of IND-AS on 4QFY16 financials
INR million
Revenue
Operating costs
Depreciation
Interest charge
Other income
Total
Takeaways from management commentary
Several reasons attributable to revenue miss:
At the end of the previous
quarter, MTCL had guided for weakness in 1HFY17 led by delayed
commencement of projects in the verticals of Retail & CPG and BFSI. Apart from
this headwind, the company also faced a revenue decline in Bluefin, which
weighed upon overall revenue growth.
Weakness to continue for another quarter:
2Q revenue is expected to grow
moderately on account of project cancellations, deferment and delays amid
macroeconomic uncertainty and client-specific issues. Although Bluefin is
expected to revive in 2Q, overall revenue growth will only bounce back strongly
in 2HFY17.
Commentary around FY17 maintained despite performance:
Despite the
weakness in 1HFY17, MTCL maintained its guidance of industry-leading revenue
growth in FY17. The confidence stems out of the fact that a majority of the
guidance is already won (or is in the final stages of winning) and execution is a
function of the commencement of deals. As soon as these projects start to ramp
up, revenue growth will likely rebound.
Pricing environment challenging in traditional services:
MTCL has been
witnessing pricing pressure in traditional services; especially in contracts that
are up for renewal. This commentary has been consistent since the last couple
of quarters.
Multiple margin levers for FY17:
The management indicated expectations of
margin improvement in FY17, compared to FY16, despite lower revenue growth
and integration of lower margin acquisitions. Despite the 200bp miss in 1Q, it
maintained its commentary around profitability. It expects flat margins in 2Q
despite wage hikes because of the absence of visa expenses and improved
operational efficiencies. Moreover, 450 campus hires would be coming on board
in 2Q, thus rationalizing the pyramid. Through the year, it expects revenue
growth to be the biggest driver of margin expansion.
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4

MindTree Consulting
Revenue guidance for FY17 implies a steep acceleration
MTCL guided for industry-leading growth in FY17 despite the tepid start to the
year, and expectations of continued moderation in 2Q. This implies 3.2% CQGR
in 2HFY17.
The full integration of the 3 acquisitions in FY16 (Bluefin, Relational and
Magnet360) are expected to add ~4.2% to FY17 growth, given the fact that
Bluefin and Relational were integrated for 3 quarters in FY16, and Magnet360
for 1 quarter.
Although the acquisitions make up for a good 4.2% in revenue growth, it yet
implies double digit revenue growth in the organic business to reach its
historical average revenue growth of ~15%.
Change in estimates
To account for the ~1% revenue growth miss in 1QFY17, we have cut our
revenue estimates for FY17/18E by 1% each.
However, we have toned down our EBITDA margin estimates for FY17 / FY18 to
15.5% / 17%, down 230bp / 150bp.
Given the tepid revenue growth, integration of low-margin acquisitions,
continued pricing pressure in traditional services and consistent shift of business
to onsite leads us to believe margin maintenance in FY17 would be improbable.
Factoring only for revenue and margin miss, our earnings cut is to the tune of
13.9/8.6% for FY17/18E.
However, the shift to IND-AS has weighed upon earnings additionally because of
the incremental amortization expense. Taking this into account, we have cut our
earnings estimate for FY17/18E by 21.5/14.9%.
.
Exhibit 6: Change in estimates
Revised
FY17E
INR/USD
USD Revenue (m)
USD Rev growth (%)
EBITDA Margin (%)
EBIT Margin (%)
EPS (INR)
Impact of IND-AS
Amortization (INRm)
Amortization (INR per share)
EPS (ex Amortization)
EPS cut (ex Amortizaion)
524.9
3.1
35.6
-13.9
525.6
3.1
45.7
-8.6
67.7
828
15.8
15.5
11.7
32.5
FY18E
70
938
13.3
17
13.7
42.5
Earlier
FY17E
68
837
17
17.8
15.1
41.4
FY18E
70
947
13.2
18.5
15.8
50
Change
FY17E
-0.50%
-1.00%
-122bp
-231bp
-333bp
-21.50%
FY18E
0.00%
-0.90%
15bp
-148bp
-208bp
-14.90%
Source: Company, MOSL
Valuation and view
MTCL has been a focused mid-tier company with play on select verticals (BFSI,
Retail, Travel, Hi-Tech) and services (Digital, IMS, ADM). Its pragmatic strategy
has been backed by strong execution, which has helped the company grow
above industry in its IT Services business – at a CAGR of 17% over FY10-15.
18 July 2016
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MindTree Consulting
The company remains actively focused on Digital, which continues to grow
ahead of company average. Proportion of Digital to overall revenues has
increased to 39.9% in 1QFY17, from 34.7% a year ago. MTCL has been investing
to improvise its early mover advantage in Digital through 4 acquisitions in the
last one year - around P&C Insurance, SAP HANA, CPG analytics and Salesforce.
We believe that acquisitive intent is the right approach in the Digital
opportunity, and that it will help a player of MTCL’s scale to keep extracting
opportunities to grow its share of clients’ wallet.
With continued traction in Digital / SMAC, MTCL should continue to grow at the
higher end of the industry band if not better – barring risk of slowdown in one
or more of its top accounts. ~40% revenue exposure to Digital augurs well for
company’s growth, and the company continues to actively invest in building
capabilities and leadership in this area. Moreover, Digital is becoming a key
aspect in mining existing accounts, and in getting an entry-point into new ones.
At 18.9/14.4x FY17/18E, EPS, the stock trades well above the average across its
listed history (9 years). We expect the company to grow its USD revenues at a
CAGR of 14.5% over FY16-18E and EPS at a CAGR of 8.9% during this period.
Although it has multiple margin levers in place, especially with current SGA run
rate of ~22% above other companies, and utilization including trainees at ~71%
below peers; pricing pressure in traditional services, and the onsite-centric
nature of incremental business have been the key constraints to margin
sustenance / expansion.
Although a premium to historical average is explained by: [1] the turnaround
following unfruitful past acquisitions, [2] strong execution in IT Services driving
confidence of above-industry growth, and so also strong book-to-bill in the last
four quarters and [3] capabilities and expansion in Digital, we are reducing our
target multiple to 14x (from 15x previously) to factor ongoing pressures in both
revenue growth and margins.
Our one-year forward target price of INR600 discounts FY18E EPS by 14x.
Challenges in MTCL’s portfolio of large BFSI and Retail accounts will keep organic
growth under check at least for FY17, limiting the upside to CMP at current
levels. Maintain Neutral.
Key triggers
Uptick in margins on SGA rationalization and utilization expansion
Steady increase in revenue contribution from Digital
Faster uptick in BFSI/Retial & CPG
Key risk factors
Risk from vendor consolidation as client concentration is high
Margin decline from appreciation of INR
Pricing decline in traditional deals’ renewal
18 July 2016
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MindTree Consulting
Exhibit 7: 1-year forward PE band
30
25
20
15
10
5
0
4.0
11.9
14.7
PE (x)
Peak(x)
Avg(x)
Min(x)
27.3
Exhibit 8: 1-year forward PB band
5.5
4.5
3.5
2.5
1.5
0.5
2.5
0.6
PB (x)
Peak(x)
5.1
3.6
Avg(x)
Min(x)
Source: Company, MOSL
Source: Company, MOSL
18 July 2016
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MindTree Consulting
Story in charts
Exhibit 9: Deal wins continue momentum
Exhibit 10: ..driven by Digital/SMAC based revenues
Digital Revenues
281
165
165
152
164
207.9 193
204
220
32
32
In USD m
% of Revenues
Deal Wins (USDm)
33
33
32
38.6 39.9
34.7 36.6 36.1
42.5 45.2 48.5 48.7 47.3 53.8 66.0 66.6 71.2 73.6
Source: Company, MOSL
Source: Company, MOSL
Exhibit 11: Deal wins have consistently bettered revenue
Deal Wins (USDm)
320
270
220
170
120
Revenue (USDm)
Exhibit 12: Efforts proportion at onsite has increased
steadily…
Efforts mix (%)
Onsite
Offshore
88.3
88.5
87.2
85.7
83.7
82.2
79.5
11.7
FY10
Source: Company, MOSL
11.5
FY11
12.8
FY12
14.3
FY13
16.3
FY14
17.8
FY15
20.5
FY16
Source: Company, MOSL
Exhibit 13: …Putting margins under pressure…
EBITDA margin (%)
SGA (%)
Exhibit 14: …Despite improved utilization
Utilization
Incl. Trainees (%)
79.0
75.5
72.0
68.5
65.0
Excl. Trainees (%)
22.6 21.4 21.3
22.2 21.8 21.8 21.7 24.0 22.8 22.6 21.3 22.3
19.4
18.4 20.8 19.5 21.5 20.0 19.8 20.5 19.5 17.1 18.5 17.7 16.7 14.7
Source: Company, MOSL
Source: Company, MOSL
18 July 2016
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MindTree Consulting
Exhibit 15: Operating Metrics
4QFY14
Geographic Mix - %
US
Europe
India
APAC
Service Line Mix - %
Development
Maintenance
Consulting & IP Licensing
Package Implementation
Independent Testing
Infrastructure Mgt & Tech Support
IP Licensing
Vertical Mix - %
Retail, CPG & Manufacturing
BFSI
Travel & Hospitality
Hitech & Media
Others
Project Type - %
FPP
T&M
Efforts Mix - %
Onsite
Offshore
Revenue mix - %
Onsite
Offshore
Utilization - %
Including Trainees
Excluding Trainees
Client Metrics
No. Of Active Clients
New Clients added
Client Buckets
USD1m clients
USD5m clients
USD10m clients
USD20m clients
USD30m clients
USD50m clients
Client Contribution - %
Top client
Top 5
Top 10
Revenue from Repeat business
58.8
28.0
3.7
9.4
33.1
22.6
3.8
4.1
16.7
18.6
1.1
22.1
23.3
15.4
31.8
7.4
42.5
57.5
17.2
82.8
43.8
56.2
68.5
68.7
207
15
73
24
13
6
3
0
8.2
33.1
49.2
99.1
1QFY15
59.2
26.8
3.5
10.5
33.9
20.6
3.8
5.4
15.7
18.9
1.7
21.2
22.7
16.4
32.7
7.0
43.8
56.2
17.0
83.0
44.2
55.8
72.1
72.4
206
3
75
26
13
6
3
0
8.7
32.3
49.0
99.2
2QFY15
60.4
26.1
4.0
9.6
33.4
21.2
4.2
5.4
15.5
18.7
1.6
21.6
22.8
17.1
32.7
5.8
43.6
56.4
17.6
82.4
45.6
54.4
73.5
74.2
200
8
77
27
13
7
4
0
9.1
32.4
48.8
99.7
3QFY15
63.1
24.2
4.1
8.6
34.0
21.4
4.1
5.8
15.4
17.6
1.6
22.2
23.5
16.2
32.7
5.4
46.5
53.5
18.2
81.8
45.8
54.2
71.8
74.2
201
5
83
27
13
6
4
1
9.6
32.5
48.1
99.4
4QFY15
64.9
23.7
3.6
7.8
33.2
20.8
3.9
7.5
17.5
15.4
1.7
21.7
25.0
16.0
32.6
4.7
46.5
53.5
18.5
81.5
47.1
52.9
70.2
71.1
217
8
88
28
14
6
4
1
10.1
32.3
47.3
99.2
1QFY16
67.5
21.9
3.4
7.2
33.4
21.7
3.7
7.2
17.7
14.9
1.4
22.1
26.9
15.6
35.4
0.0
48.9
51.1
18.6
81.4
48.1
51.9
70.3
71.9
218
16
88
28
13
6
0
2
11.0
33.2
48.5
98.9
2QFY16
63.2
26.6
3.2
7.0
31.8
21.0
2.8
13.3
12.8
17.0
1.3
20.6
24.7
13.9
30.4
10.5
49.7
50.3
20.0
80.0
52.4
47.6
71.4
73.3
296
18
92
29
13
6
0
2
10.7
31.8
45.5
98.9
3QFY16
63.5
26.4
2.7
7.4
32.0
19.8
2.6
12.9
12.8
18.1
1.8
20.3
25.1
15.6
30.2
8.7
50.0
50.0
21.1
78.9
54.5
45.5
68.5
69.9
294
23
93
29
13
5
0
2
10.9
32.1
46.2
98.5
4QFY16
65.9
24.5
2.8
6.8
33.0
18.0
4.0
13.6
12.6
17.5
1.3
23.8
24.4
16.4
35.3
0.0
47.7
52.3
22.3
77.7
57.6
42.4
69.4
70.6
348
37
101
31
15
6
0
2
11.7
29.7
42.7
96.0
1QFY17
66.7
23.1
3.1
7.1
32.5
17.3
4.1
13.9
12.8
18.4
1.0
24.1
24.9
15.0
36.1
0.0
48.7
51.3
22.9
77.1
59.5
40.5
71.4
72
343
17
98
31
16
5
0
2
13.1
29.6
42.6
98.2
Source: MOSL, Company
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MindTree Consulting
Financials and Valuation
Key assumption
Y/E March
INR/USD Rate
Revenues (USD m)
Offshore Revenue (%)
Total Headcount
Per Capita Productivity (USD)
Offshore Uilization (%)
Volume growth (%)
Blended Pricing Change (%)
2011
45.6
331
69.8
9,547
34,660
70.2
20.9
0.5
2012
47.6
403
66.4
11,674
34,489
69.9
16.5
4.4
2013
54.2
436
62.4
11,430
38,114
70.4
6.4
1.7
2014
60.4
502
58.2
13,218
37,948
67.8
13.3
1.6
2015
61.0
584
54.3
14,795
39,458
71.9
13.4
2.7
2016
65.6
715
46.6
16,958
42,175
69.9
16.5
5.2
2017E
67.7
828
40.2
18,134
45,662
71.6
11.3
4.1
2018E
70.0
938
39.8
20,281
46,270
72.0
12.7
0.6
Income Statement
Y/E Mar
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
2011
15,091
16.4
1,781
11.8
712
1065.4
4
241
0
1,307
222
17.0
0
1,085
1,085
-49.7
2011
400
7,362
7,762
371
216
8,133
5,624
2,673
2,951
1
7
6,403
0
2,825
1,564
2,014
2,027
167
1,860
4,376
8,133
2012
19,152
26.9
2,930
15.3
695
2230.0
5
385
0
2,615
430
16.4
0
2,185
2,185
101.4
2012
405
9,167
9,572
71
321
9,643
5,820
3,272
2,548
85
7
9,541
0
4,078
3,677
1,786
3,703
137
3,566
5,838
9,643
2013
23,618
23.3
4,860
20.6
624
4226.0
10
10
0
4,236
847
20.0
0
3,389
3,389
55.1
2013
415
12,722
13,137
89
360
13,226
6,457
3,896
2,561
571
230
11,497
0
4,508
5,279
1,710
3,684
189
3,495
7,813
13,226
2014
30,316
28.4
6,102
20.1
809
5289.0
4
496
0
5,785
1,275
22.0
0
4,510
4,510
34.1
2014
417
15,988
16,405
195
402
16,600
6,886
3,621
3,265
496
175
14,688
0
6,004
6,344
2,340
4,393
82
4,311
10,295
16,600
2015
35,619
17.5
7,092
19.9
1,018
6073.0
1
835
0
6,908
1,545
22.4
0
5,363
5,363
18.5
2015
837
19,287
20,124
357
449
20,485
8,879
4,366
4,513
354
8
18,526
0
6,963
9,106
2,457
6,064
536
5,528
12,462
20,485
2016
46,896
31.7
8,299
17.7
1,332
6964.0
3
810
0
7,774
1,741
22.4
0
6,033
6,033
12.3
2016
1,678
22,278
23,956
1,090
602
25,046
10,323
5,698
4,625
232
58
18,148
0
9,728
4,433
3,987
7,941
1,679
6,262
10,207
25,461
2017E
56,051
19.5
8,707
15.5
1,956
6576.6
174
612
0
7,189
1,729
24.1
0
5,460
5,460
-9.8
2017E
1,678
25,415
27,093
626
474
27,719
11,747
7,130
4,617
345
158
21,325
0
11,679
4,852
4,795
9,161
1,916
7,245
12,164
27,719
(INR Million)
2018E
65,690
17.2
11,192
17.0
2,089
9008.8
94
392
0
9,401
2,256
24.0
0
7,145
7,145
31.7
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Min. Int. & Assoc. Share
Reported PAT
Adjusted PAT
Change (%)
Balance Sheet
Y/E Mar
Share Capital
Reserves
Net Worth
Debt
Deferred Tax
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
(INR Million)
2018E
1,678
30,125
31,803
626
474
32,429
14,457
8,693
5,764
345
158
25,976
0
13,663
7,331
4,983
10,703
2,009
8,694
15,273
32,429
18 July 2016
10

MindTree Consulting
Financials and valuation
Ratios
Y/E Mar
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Cash P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios (%)
Fixed Asset Turnover (x)
Debtors (No. of Days)
Net Debt/Equity (x)
Y/E Mar
CF from Operations
Cash for Working Capital
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free cash flows
(Pur)/Sale of Invt
CF from Inv. Activity
Proc. from equity issues
Proceeds from LTB/STB
Dividend Payments
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
2011
6.2
11.0
47.4
2.5
40.3
2012
13.4
17.6
58.3
4.0
29.8
2013
20.4
24.0
78.6
3.0
14.7
2014
26.9
31.7
97.9
6.3
23.2
2015
31.9
38.0
119.8
8.5
26.6
2016
35.9
43.8
142.4
10.5
29.3
2017E
32.5
41.0
161.2
12.0
36.9
2018E
42.5
51.8
189.3
12.0
28.2
22.8
19.4
15.7
3.2
6.3
1.0
19.2
16.2
13.2
2.6
5.1
1.4
17.1
14.0
11.9
2.1
4.3
1.7
18.9
15.0
11.3
1.8
3.8
2.0
14.4
11.8
8.6
1.5
3.2
2.0
15.0
14.3
14.0
5.1
68
0.0
2011
1,277
-844
433
-836
-403
453
-383
139
13
-150
2
56
403
459
25.2
25.1
29.9
7.5
78
0.0
2012
2,551
-523
2,028
-410
1,618
-1,917
-2,327
120
398
-176
342
143
459
602
29.8
37.0
51.0
9.2
70
0.0
2013
3,267
-603
2,664
-1,057
1,607
-862
-1,919
322
-233
-214
-125
650
602
1,252
30.5
35.5
48.1
9.3
72
0.0
2014
4,985
-1,766
3,219
-1,517
1,702
-726
-2,243
63
-252
-924
-1,113
-67
1,252
1,184
29.4
32.8
45.4
7.9
71
0.0
2015
5,546
489
6,035
-1,851
4,184
823
-1,028
420
-4
-1,712
-1,296
3,514
1,184
3,763
27.4
30.6
34.4
10.1
76
0.0
2016
6,555
-1,207
5,348
-1,322
4,026
367
-955
841
-5
-2,129
-1,293
3,100
3,763
2,332
21.4
24.9
23.3
12.1
76
0.0
2017E
6,279
-682
5,597
-1,537
4,060
395
-1,142
0
-4
-2,435
-2,439
2,016
2,332
1,844
24.3
30.0
29.0
11.4
76
0.0
Cash Flow Statement
(INR Million)
2018E
8,316
-630
7,686
-2,710
4,976
620
-2,090
0
0
-2,435
-2,435
3,161
1,844
4,323
18 July 2016
11

MindTree Consulting
Corporate profile
MindTree (MTCL) is a global information technology
solutions company, with revenue of over USD550m
(LTM) and over 13,000 employees. It is a strategic
partner to many Fortune 500 enterprises, providing
services in areas like Application Development,
Application Maintenance, Consulting, Testing and
Infrastructure Services, across industries like BFSI,
Travel and Retail. It enables customers to achieve
competitive advantage through flexible and next
generation global delivery models, agile methodologies
and expert frameworks.
Company description
Exhibit 1: Sensex rebased
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Promoter
DII
FII
Others
Mar-16
13.8
6.3
41.8
38.2
Dec-15
13.8
6.8
44.3
35.1
Mar-15
13.7
7.9
37.7
40.7
Exhibit 3: Top holders
Holder Name
Coffee Day Enterprises Limited
Nalanda India Fund Limited
Coffee Day Trading Limited
Matthews India Fund
V G Siddhartha
% Holding
10.4
9.4
6.3
3.2
3.0
Source: Capitaline
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
Albert Hieronimus
Subroto Bagchi
Krishnakumar Natarajan
N S Parthasarathy
Rostow Ravanan
Vedavalli S
Designation
Vice Chairman & Director
Executive Chairman
CEO & Managing Director
ED/President/COO
Executive Director & CFO
Company Secretary
Exhibit 5: Directors
Name
APURVA PUROHIT
Pankaj Chandra
Siddhartha V G
Name
Manisha Girotra
Ramesh Ramanathan
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Deloitte Haskins & Sells
Deloitte Haskins & Sells
G Sankar Prasad
Type
Statutory
Statutory
Secretarial Audit
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
32.5
42.5
Consensus
forecast
40.9
48.0
Variation (%)
-20.6
-11.5
Source: Bloomberg
Source: Capitaline
18 July 2016
12

PRODUCT GALLERY
Our recent reports on MTCL
Our recent reports on IT sector
Our recent reports on other IT companies

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