MindTree fell 6.07% to Rs 516.50 at 15:09 IST on BSE after the said it Q2 September 2016 revenue to be lower than the previous quarter.
The announcement was made after market hours on Friday, 2 September 2016.Meanwhile, the BSE Sensex was up 404.93 points, or 1.42%, to 28,937.04.
On BSE, so far 2.53 lakh shares were traded in the counter, compared with average daily volume of 41,426 shares in the past one quarter. The stock hit a high of Rs 525 and a low of Rs 504.50 so far during the day. The stock hit a record high of Rs 803.50 on 4 March 2016. The stock hit a 52-week low of Rs 546.25 on 2 September 2016. The stock had underperformed the market over the past 30 days till 2 September 2016, sliding 8.88% compared with 2.95% rise in the Sensex. The scrip had also underperformed the market in past one quarter, falling 15.28% as against Sensex's 6.29% rise.
The large-cap company has equity capital of Rs 167.94 crore. Face value per share is Rs 10.
MindTree said the decline in revenue is expected due to cross-currency movements, project cancellations and slower ramp-ups in a few large clients across different verticals and continued weakness in its UK-based subsidiary Bluefin.
Margins are going to be lower than planned with a decline in earnings before interest, taxes, depreciation and amortization (EBITDA) margins in Q2 September 2016 compared to Q1 June 2016. In light of its weak revenue outlook, the Bluefin business is expected to report an EBITDA loss for the quarter. MindTree has implemented a range of operational efficiency improvements and cost control measures. The savings derived from these initiatives may not be sufficient to offset the revenue slowdown in Q2 September 2016.
The company said it believes its business fundamentals, strategic direction and market positioning continue to look strong in the medium-term especially with its investments in Digital and Managed Services. Business pipeline from its core services and Magnet 360 is amongst the strongest in the last few years. The company said it is well-placed to win some of these opportunities, including some large ones to be awarded over the next few months. The uncertainties in the Bluefin business are likely to continue for a few more months given the volatile macroeconomic environment in Europe. The slower revenue momentum in the first half (H1) of the financial yar ending March 2017 (FY 2017) will delay the aspiration to grow EBITDA margins over the financial yar ended March 2016. The cost saving measures and other related initiatives will help the company deliver a higher margin in the second half (H2) of FY 2017 over H1 FY 2017. Even with this change in outlook, the company said it continues to expect its annual revenue growth to be higher than the NASSCOM industry average.
MindTree's consolidated net profit declined 7.2% to Rs 123.50 crore on 0.6% growth in revenue to Rs 1327.60 crore in Q1 June 2016 over Q4 March 2016.
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MindTree is a global information technology consulting firm specializing in corporate IT services and solutions.
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