Rupee: 1% move swings margin by 35-40 bps, says Mindtree

Written By Unknown on Senin, 26 Mei 2014 | 15.46

Mindtree now expects margins in FY15 (ex-currency) to remain stable. The IT firm is now focused on improving utilisation levels and its employee pyramid.

A rising rupee may not be a good news for export-oriented companies.

Rostow Ravanan, ED & CFO of Mindtree , said a 1 percent appreciation in the rupee impacts margins by 35-40 bps.

However, the company expects the rupee impact on Q1FY15 margins to be limited due to major hedges. Ravanan thinks they will be able to offset a reasonable portion (of rupee appreciation) through "operational improvements, pricing improvements and revenue growth".

Mindtree positively surprised in Q4 on improving margins by 200 bps. It surpassed street expectations in the fourth quarter with net profit growing 11 percent sequentially to Rs 98.2 crore as against 4 percent growth expected by analysts. It ended the year with a dollar revenue growth of 15 percent.

The company board has also approved a bonus issue in ratio of 1:1. "Shareholders should get the credit on or before June 9, and can start trading those shares on or before 14 June," said Ravanan.

Mindtree now expects margins in FY15 (ex-currency) to remain stable. The mid-cap IT firm is now focused on improving utilisation levels and its employee pyramid.

The company expects the hi-tech segment, which contributed only about 5 percent revenue growth in FY14, to deliver close to a double-digit number in FY15 as the pipeline looks strong.

Ravanan feels visa cost would be a bigger headwind for margins this quarter. Mindtree has incurred around USD 2 million of visa cost in April.

Transcript to follow

Mindtree stock price

On May 26, 2014, at 14:14 hrs Mindtree was quoting at Rs 1415.00, up Rs 13.50, or 0.96 percent. The 52-week high of the share was Rs 1724.95 and the 52-week low was Rs 782.70.


The company's trailing 12-month (TTM) EPS was at Rs 107.94 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 13.11. The latest book value of the company is Rs 422.29 per share. At current value, the price-to-book value of the company is 3.35.


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