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Buy MindTree, target Rs 970: HDFC Securities

HDFC Securities has a buy call on MindTree with a target price of Rs 970.

The current market price of MindTree is Rs 909.95.

Time period given by the brokerage is one year when MindTree price can reach the defined target.

"Mindtree posted robust revenue growth and in-line profitability. Revenue came at USD 226mn, 5.5 per cent QoQ led by digital (45 per cent of rev) growth at 8.3 per cent QoQ. EBITDA per cent stood at 16.1 per cent, +103bps QoQ supported by operational efficiencies (+30bps impact). APAT stood at Rs 1.70bn, adjusted for write-back of earn-out from prior acquisitions (Rs 0.13bn). Management has guided for higher revenue growth/margins in FY19 as compared to FY18. We re-iterate our positive outlook on Mindtree based on (1)Strong deal pipeline and deal wins (>60 per cent increase in pipeline and higher win-rate in transformational deals), (2) Strong outlook in top account (9.6 per cent CQGR in last 4-qtrs), (3) Continuity in digital traction (highest YoY growth in last six qtrs) with industry leading digital mix, (4) Recovery in BFSI vertical and top 2 to 10 accounts (26 per cent of rev) ahead, supported by ramp-up of prior deal wins. Revise FY19/20E EPS by ~3 per cent and expect revenue/EPS growth of 14/28 per cent CAGR over FY18-20E. Factored USD rev growth of 15.6/11.7 per cent and EBITDA per cent of 15.6/16.9 per cent for FY19/20E, respectively. Maintain BUY with TP of Rs 970," HDFC Securities said in a report.

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