Mindtree
Mid-cap product engineering and IT services firm Mindtree reported consolidated Q2FY14 revenue of Rs. 770 crore, up 19% QoQ and 29% YoY, as dollar revenues increased 5.4% QoQ. The company, which is undergoing organizational re-structuring and strategic transformation under guidance from consulting major Bain, however reported 5% lower PAT QoQ at Rs. 129 crore (Rs. 135 crore in Q1FY14) due to lower forex gains of just Rs. 20 crore in the quarter vis-à-vis Rs. 62 crore in the immediately preceding quarter. However, employee cost as a percentage to sales contracted sequentially to 57.8% from 59% in Q1.
Thus, Q2FY14 EPS stands at Rs. 31 as against Rs. 64 for H1FY14 and Rs. 83 for FY13. In other words, company with close to 13,000 employees and 220 active customers, is growing at over 50% annual rate, with manufacturing and travel and transportation verticals providing the necessary strength to topline and margins.
Company has declared an interim dividend of Rs. 5 per share (FV Rs. 10 each), and surplus cash per share as of 30th September 2013 stood at Rs. 127. Although close to its 52 week high, share price is currently ruling at single digit cash-adjusted PE multiple, based on last closing price, i.e. at 9.4 times to be precise, based on FY14E earnings, which is among the cheapest IT stocks. Its high growth run-rate is only an add-on, which will help it reach the target billion dollar in revenues soon.