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With IT stocks the bull market rally, Mindtree shares have been an outperformer in the space as the scrip has given multibagger returns this year. From trading around 1,660 per share level in early January, to currently hovering at 4,131 apiece, the multibagger stock has registered a gain of more than 220% in the past year and has surged nearly 150% in 2021 (year-to-date or YTD) alone.

Domestic brokerage firm Axis Securities sees further upside on the IT stock and has a Buy recommendation on the back of strong outlook. It sees robust demand for digital transformations and other services, significant investment in automation in the next two years by the BFSI vertical, robust demand scenario across geographies, and higher offshoring and strong volume growth to aid margin expansion as the key growth drivers.

Mindtree's management has guided double-digit growth in FY22 in the backdrop of robust deal wins. “Additionally, higher offshoring, better utilization, and lower attrition are likely to expand operating margins in the near term. We recommend a BUY rating on the stock with a target price of 4,600 per share," Axis said in a note on September 16. 

Mindtree has a strong and geographically diversified presence in terms of revenue distribution. While the US and Europe contributed 76% and 16% of the revenue respectively, APAC contributed 7.2%. The HI tech & Media contributed 45% of the revenue, BFSI 18.2%, Retail CPG and Manufacturing contributed 13.3% each. During FY21, the majority of the verticals and geographies exhibited strong and broad-based demand.

“Mindtree continues to invest in employee addition to ramp up new deal wins won in the previous quarter and adhere to project delivery timelines. In the long run, this will aid in achieving sustainable growth," the note added.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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