Mindtree net profit jumps 49% YoY in Q4; revenue up 37.4% to Rs 2,897 crore

Rising demand for its services in Cloud and digital transformation deals along with deal sizes getting smaller helped mid-cap information technology (IT) services players Mindtree to see a 49 per cent year-on-year (YoY) jump in net profit in the fourth quarter of financial year 2021-22 (Q4FY22).
 

Net profit rose to Rs 473 crore in Q4, which represented an 8 per cent rise sequentially.

The Mindtree management declined to comment on reports of a likely merger with group company Larsen & Toubro Infotech. When asked about the news, Debashis Chatterjee, chief executive officer and managing director of the firm, said: “We do not comment on market speculation.”

Revenue rose 37.4 per cent YoY in Q4 to Rs 2,897 crore. In US dollar terms, revenue grew 4.8 per cent quarter-on-quarter (QoQ). This is the fifth consecutive quarter of 5 per cent revenue growth in US dollars. On a constant currency basis, Mindtree reported revenue growth of 5.2 per cent.

“Our three-pronged approach of accelerating core portfolio, expanding emerging portfolio, and incubating new portfolio, has helped us sustain our growth momentum while staying ahead of market trends and customer needs in delivering digital transformation at scale,” Chatterjee said.

For the full year, the company reported revenue growth of 32.1 per cent at Rs 10,525 crore and profit grew 48.8 per cent to Rs 1,652.9 crore.

The company registered Ebit (earnings before interest and taxes) margin of 18.9 per cent, which was a decline of 30 basis points QoQ. Growth was driven by the technology, media and services vertical (up 5.2 per cent QoQ), BFSI (up 8.9 per cent QoQ), and travel and hospitality (up 9.3 per cent QoQ). In terms of geographies, the US and rest of the world led the pack, with 5.6 per cent QoQ and 8.5 per cent QoQ revenue growth, respectively.

“The company’s revenue growth largely came in from continued client spending in technology, media sector (43 per cent of the mix) as well continued traction in its top clients, which is a reflection of strong order book. The growth also came in because of better utilisation for the quarter, which improved by 170 bps QoQ. The onsite-offshore mix continued to be skewed towards offshore as in the last one year it improved by 340 bps, which is helping in margins in our opinion,” said the first cut report by ICICI Direct Research.

Like its larger peers, Mindtree also saw a rise in attrition. The company reported attrition at 23.8 per cent in Q4FY22, up from 12.1 per cent in Q4FY21, and 21.9 per cent in Q3FY22.

“Attrition has gone up, but we have seen a little bit of stabilisation within this quarter. Over the next 2-3 quarters, we see attrition stabilising, but we are taking all measures to ensure that the growth momentum does not slow down in terms of business and delivery to our clients,” added Chatterjee. The company’s net addition in FY22 was over 11,200, more than six times the headcount addition in the preceding year. It closed the year with a total headcount of over 35,000.