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Results review: Brokerages downbeat on Mindtree post Q1

The company reported 25 percent increase in the net profit for June quarter at Rs 121.7 crore against Rs 97.2 crore posted during the previous quarter.

Shares of Mindtree declined more than 4 percent intraday Thursday as most of brokerages has downgraded the stock to sell post announcement of Q1 earnings.

The company reported 25 percent increase in the net profit for June quarter at Rs 121.7 crore against Rs 97.2 crore posted during the previous quarter.

The company posted a total income of Rs 1,289.5 crore against Rs 1,318.1 crore in the previous quarter.

Meanwhile, the company posted US dollar revenue at USD 200.1 million against a CNBC-TV18 poll of USD 203.3 million.

The research houses remain downbeat on the stock and also reduced the target price.

CITI: Sell | Target Rs 425

CITI maintained sell rating on the stock with reduced target price of Rs 425 as it believes that there will be challenge to maintain profitable growth going ahead.

The EBIT of the company declined 34 percent to Rs 97.6 crore, Y-o-Y, which was impacted by currency and visa headwinds, while the wage hikes are expected to be the key headwind in Q2.

The PAT of the company has increased to Rs 121.7 crore which was boosted by higher other income including one-time gain of Rs 37.4 crore.

Morgan Stanley: Underweight | Target Rs 390

The research house maintained underweight rating on stock a target of Rs 390.

The firm lowered its USD revenue forecasts by 1 percent and margins by 120-200 bps over F18e-20e, leading to earnings estimate cuts of 7-10 percent. It believes that the volatility in performance of the company cannot be ruled out.

Macquarie Research: Underperform | Target: 370

The research firm has maintained underperform rating on the stock with cut in the target price to Rs 370 per share.

The firm lowered its FY18/19 EPS estimates by 3-5 percent and cut the target price by 3 percent to Rs 370. It prefers Larsen & Toubro Infotech and Hexaware Technologies in the mid-cap Indian IT space.

Motilal Oswal: Sell | Target Rs 450

Motilal Oswal has downgraded the stock to sell rating with target of Rs 450, which is led by the uncomfortable duality of expensive valuation multiple and series of challenges.

The company revised its FY18 revenue growth outlook to high-single-digits from low-double-digits earlier, following a slow start and lack of predictability in segments such as Salesforce and Bluefin, it added.
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