Mindtree Q1 net profit falls 41.4% to Rs 92.7 cr; confident of higher-than-industry growth rate in current fiscal

New Delhi: Mid-sized IT firm Mindtree on Wednesday posted a 41.4 percent decline in consolidated net profit to Rs 92.7 crore for the June quarter, but exuded confidence in delivering "above-industry growth rates" in 2019-20.

The company, which has been in limelight over its hostile takeover by construction major Larsen and Toubro (L&T), had registered a net profit of Rs 158.2 crore in the corresponding period of the previous financial year.

Mindtree's revenues, on the other hand, rose 11.9 percent to Rs 1,834.2 crore in the June 2019 quarter as compared with Rs 1,639.5 crore in the year-ago period.

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"We have delivered stable results in the face of many uncertainties, reflecting the unique strengths of Mindtree. This quarter saw us achieve an all-time high contract closures which sets the pace for the rest of the year," Mindtree Chief Executive Officer and Managing Director Rostow Ravanan said in a statement.

Representational Image. Image Courtesy: Facebook/mindtreeltd

He added that while external factors pose some challenges, the company's focussed strategy and strong client relationships make it confident of delivering above-industry growth rates in 2019-20 as well.

Earlier this month, L&T was classified as the new promoter of the IT firm after it acquired 60.06 percent stake.

L&T's takeover of Mindtree is the first-ever hostile takeover in the country's IT space. First, the group bought a 20.32 percent stake in the Bengaluru-based company from V G Siddhartha and his coffee enterprise for over Rs 3,000 crore in March. Subsequently, it picked up more shares from the open market and through an open offer.

At Mindtree's AGM on Tuesday, L&T addressed the shareholders of the IT firm for the first time since the takeover. It promised to provide further impetus to the IT company's growth by way of board-level oversight and relevant client connects.

In a video post, Ravanan said the first quarter had seen "record deal wins of $324 million" with strong momentum across renewals and new contracts.

On a sequential basis, Mindtree saw its net profit decline 53.3 percent from Rs 198.4 crore in March quarter, while revenue declined marginally from Rs 1,839.4 crore in the fourth quarter.

In dollar terms, the company's net profit fell 42.7 percent to $13.4 million in the said quarter, while revenue was up 9.4 percent to $264.2 million from the year-ago period.

Ravanan said the company's digital business is doing well and continues to expand at twice the growth rate of Mindtree.

He added that the company will also provide further details of its digital business going forward.

"Digital is now broken up into Mindtree interactive, data sciences and engineering, and cloud. Under the new break-up, digital now comes to approximately 40 percent of our revenues," he said.

Mindtree had 346 active clients at the end of June 2019. It had a total headcount of 20,935 people with trailing 12-month attrition at 15.1 percent.

Mindtree Chief Financial Officer Pradip Menon said the company had registered a 260-basis point impact on account of the special payment made to all employees on the occasion of the 20th anniversary of the company.

Mindtree had 346 active clients at the end of June 2019. It had a total headcount of 20,935 people with trailing 12-month attrition at 15.1 percent.