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Mindtree: Forex gains propel net profits - Views on News from Equitymaster
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Mindtree: Forex gains propel net profits
Jul 16, 2012

Mindtree Limited has announced the first quarter results of financial year 2012-2013 (1QFY13). The company has reported a 7.1% quarter-on-quarter (QoQ) growth in sales and 28.6% QoQ growth in net profits. Here is our analysis of the results.

Performance summary
  • Net sales grew by 7.1% QoQ during 1QFY13. The revenue growth came without any significant growth in volumes as well as pricing during the quarter. It was mainly driven by the steep rupee depreciation during the quarter.
  • The growth in revenues was 1.2% QoQ on constant currency basis. In terms of US dollar revenues, the growth in sales was just 0.4% QoQ during the quarter.
  • Operating margins improved by 2.1% QoQ to 20.9% as compared to 18.7% seen during the previous quarter (4QFY12). This came on the back of lower operating costs during the quarter. Margin expansion was well aided by the positive effect of rupee depreciation at the topline level which offset the negative impact of salary hikes during the quarter.
  • On the back of expansion in the operating margins and higher other income, net profits grew by 28.6% QoQ during the quarter. A good jump in other income came on the back of currency gains during the quarter. Profits would have been higher if not for higher effective tax rate during the quarter. The effective tax rate was 22.6% during the quarter as compared to 16.4% seen during previous quarter (4QFY12).
  • Added 19 new clients during the quarter. The total number of active clients has gone up to 245 as compared to 237 at the end of the previous quarter (4QFY12).
  • Trailing 12 month attrition declined to 17.0% during the quarter from 18.2% reported in the previous quarter (4QFY12).

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