Mindtree Q4 FY20 net profit up 3.9% to Rs 206.2 cr, sees dip in demand

Chatterjee said the company has started working much in advance on business continuity efforts and therefore, the coronavirus pandemic did not affect its operations
IT firm Mindtree on Friday reported 3.9 per cent rise in consolidated net profit to Rs 206.2 crore for March 2020 quarter, and said it anticipates softness in demand ahead as clients defer spending due to COVID-19 pandemic.

The Bengaluru-based company had posted a net profit of Rs 198.4 crore in the same period last year.

Its revenue grew 11.5 per cent to Rs 2,050.5 crore in the quarter under review from Rs 1,839.4 crore in the year-ago period.

"Looking ahead to fiscal 2021, we anticipate softness in demand due to the unprecedented COVID-19 pandemic. However, we're well equipped to handle the global crisis based on the business continuity plan we have successfully implemented to ensure the health and safety of our employees while fully supporting our clients worldwide," Mindtree Chief Executive Officer and Managing Director Debashis Chatterjee said.

He said while the situation is still evolving, there is softness - which could be seen over the first quarter of FY21 - in terms of clients who are going to defer their spends.

"There is a general softness in terms of Q1. Many of our clients are doing things to find avenues to bounce back but travel and hospitality has been badly hit, retail and manufacturing has also been impacted...However, if you look at some of the other verticals like financial services and insurance, discretionary spending are deferred...there are some other verticals where we see good traction IT, media, CPG (consumer packaged good) vertical," he said.

 

Mindtree reports $278.4 Mn revenue for the Q4 FY’20. View here: https://t.co/GXITWJ8oef pic.twitter.com/gflDDMGZkx

— Mindtree (@Mindtree_Ltd) April 24, 2020
Chatterjee said the company remains confident of continuing to create value for clients, drive profitable growth, develop future-ready talent and maximise shareholder value.

"Our relentless focus and client-first approach have resulted in robust Q4 performance on multiple dimensions revenue growth of 1.9 per cent in constant currency, expansion of operating margin by 150 basis points and record deal wins of $393 million," he said.

Chatterjee said the company has started working much in advance on business continuity efforts and therefore, the coronavirus pandemic did not affect its operations.

IT firms like Infosys and Wipro have cautioned against business uncertainty in the near-term, while announcing their quarterly earnings.

Infosys and Wipro resisted from providing a revenue growth forecast for June quarter, while Cognizant had retracted its annual outlook for 2020.

In dollar terms, Mindtree's net profit was flat at $28.2 million, while revenue increased 6.3 per cent to USD 278.4 million in the said quarter over the year-ago period.

On full-year basis, its net profit declined 16.3 per cent to Rs 630.9 crore, while revenue grew 10.6 per cent to Rs 7,764.3 crore in FY20 from the previous fiscal.

At the end of March 2020 quarter, the company's active client base stood at 307. It had 21,991 employees at the end of the fourth quarter with trailing 12-months attrition at 17.4 per cent.

Chatterjee said the company will honour all the campus offers that have been rolled out.

On wage hikes and promotions, he said the company is watching the situation and will take a call depending on how things turn out.

Mindtree's Board of Directors has recommended a final dividend of Rs 10 per equity share for the financial year ended March 31, 2020, subject to the approval of shareholders at the 21st annual general meeting.

The company said Milind Sarwate, an independent director on its Board, has tendered his resignation "due to the re-organisation of his portfolio of Board membership across various companies".


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