Home / Companies / Mindtree Q3 profit up 58.5%, beats market expectations

Bengaluru: Software services company Mindtree Ltd said on Monday that its third quarter net profit rose about 58.5%, beating market expectations, helped by higher revenue from its banking, financial services and insurance, and retail, consumer packaged goods and manufacturing clients.

Net profit in the December quarter rose to 140.8 crore from 88.8 crore in the year-ago quarter, the company said.

Revenue rose 15.3% to 911.7 crore from 790.6 crore a year earlier.

The company had 201 active clients as of 31 December and received a $50 million order in the quarter from an existing client. Mindtree signed orders for $132 million in the third quarter of which new orders were worth $46 million. The company got about 63% of its total revenue from the US, its largest market.

“Our ability to drive significant optimization in our chosen verticals, in IT and application management, remains a strong foundation for delivering sustained value to our clients," chief executive Krishnakumar Natarajan said in a statement.

The company had been expected to report a profit of 136.2 crore on revenue of 919.9 crore, according to analyst estimates compiled by Bloomberg.

Separately, Mindtree said it would buy Discoverture Solutions, a US-based insurance solutions provider, in an all-cash deal for about $15 million.

“Mindtree being a mid-sized company, has done very well in the mid-market sector. The addition of a client in the $50 million category is a good signal in the current times," Greyhound Research analyst Sanchit Vir Gogia said in a note.

The company said it expects a strong deal pipeline in areas such as digital and infrastructure management, especially in North America. Natarajan added that the average deal size has gone up by 15% in the last two quarters. Mindtree expects deals mostly in the $20-$40 million range.

“We expect quarter 4 to be better than quarter 3 mainly because of better volume growth due to lack of seasonality. We strongly believe we will comfortably exceed the upper end of Nasscom’s industry guidance of 13-15% of FY15," Natarajan said on a post-earnings conference call.

The Discoverture acquisition will not have a significant impact on the company’s fourth quarter results, the company said.

Meanwhile, Sasken Communication Technologies Ltd said on Monday that its third quarter net profit rose 45% but revenue took a hit. Net profit in the December quarter rose to 16.13 crore from 11.12 crore in the year-ago quarter, the company said. Revenue in the period fell 5% to 107.27 crore from 113.14 crore.

Revenue from all its businesses—software products, software services, automotive, utilities and industrial, and network engineering services—decreased in the quarter.

Mindtree shares rose 2.37% to 1,412.60 on the BSE and Sasken shares fell 0.54% to 255.80 at the close of trading on a day the benchmark Sensex gained 0.5% to 28,262.01 points.

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