Mindtree Expects Growth Momentum To Continue

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Mindtree Ltd. expects growth momentum from a pandemic-driven digital push to continue even as the company refrained from offering exact guidance citing uncertainties.

The company is confident of double-digit growth in the next 12 months, Venu Lambu, executive director and president-global markets at Mindtree, said in an interview with BloombergQuint’s Niraj Shah. Agreeing that it’s a wide range, he said momentum from two consecutive quarters of 5% sequential growth will spill over into the next few quarters.

In the quarter ended March, growth was driven by a sequential rebound in travel, acceleration in retail and manufacturing, and continued traction in communication, media and technology, he said. The banking and financial services vertical, he said, was soft.

Despite the rebound, the travel vertical is performing at significantly lower than pre-Covid levels, Lambu said, and it will take a few quarters for the numbers to stabilise.

While BFSI has been stagnant for a while, he said demand for cloud, data, security and spending by mid-tier banks and Mindtree’s efforts to shore up the vertical will start showing results in FY22. The company, he said, is focusing on strategic clients and longer-term engagements.

According to Lambu, key positives for Mindtree include:

  • Strong deal wins with trailing twelve-month book-to-bill at 1.3 times.
  • Revenue from non-top clients rose at 8.6% sequentially compared with 3.3% from top clients.
  • TTM attrition improved to 12.1% from 12.5%.
  • Utilisation improved 120 basis points to 84.3%.
  • Quarterly net addition at 1,600 was the strongest in 12 years

Citing fall in attrition at Tata Consultancy Services Ltd. to a record low of 7.2% and a surge to 15% at Infosys Ltd., Lambu said attrition varies with the company in the IT sector

While there’s a “serious jostling for quality talent in the market”, he said Mindtree’s internal practices will be able to contain attrition. While talent scouting will put pressure on wage costs in FY22, Lambu expects the operating margin to sustain above 22%.

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