Bangalore: Foreign exchange losses of Rs65.79 crore and a 1.8% drop in volumes in the three months to December dragged the third quarter (Q3) profit of IT services firm MindTree Ltd by more than half to Rs8.72 crore, at a time when it expects slower growth in the year ahead due to the economic crisis affecting its clients.
MindTree, which completed the acquisition of product services firm Aztesoft Ltd in August, saw its profit dip 77% over the previous quarter. Third quarter revenue, however, almost doubled to Rs363.80 crore over the year-ago period, while growing 16.6% from July to September.
Challenges ahead: MindTree’s CEO Krishnakumar Natarajan. Hemant Mishra / Mint
“There are challenges, the visibility (for business) is not as good,” said Krishnakumar Natarajan, chief executive of MindTree, in a post-results conference call. “Going forward, we do see challenges on the pricing front.”
Traditionally, Q3 is a weak three months for most Indian IT firms due to the large number of holidays in India, the US and Europe. During the period, the firm saw volume or business growth dip by 1.8%. It added 22 customers to take its total to 260.
MindTree’s operating margins, calculated as sales less expenses, improved to 30.5%, against 27.8% in the previous quarter.
The firm reported a profit of Rs19.83 crore on revenue of Rs188.10 crore between October and December 2007. In the second quarter of FY09, it posted a profit of Rs37.27 crore on revenue of Rs312.02 crore.
MindTree expects fiscal 2009 revenue to be between $269 and $273 million (Rs1,307-1,327 crore), with an operating margin of $62-65 million and and net profit of $14.8-17.5 million.
The company’s stock fell 0.4% to Rs237.55 on the Bombay Stock Exchange on Monday, on a day the benchmark Sensex index gained 0.1% to 9,329.57 points. The results were announced after trading hours.