You are here: Home » Companies
Business Standard

Mindtree hit by project cancellations, slowing business to show lower Q2 revenue, profits

The IT firm had reported profit of Rs 123.5 crore on flattish revenues of Rs 1,327.6 crore in the quarter to June

Raghu Krishnan  |  Bengaluru 

This is article Banner

Mid Tier services firm Mindtree Ltd will report lower revenues and profits than the April to June quarter as it sees customers cancel projects, slowing business ramp-up from key customers and expected losses in its UK subsidiary Bluefin due to slowing business. Mindtree had reported profit of Rs 123.5 crore on flattish revenues of Rs 1,327.6 crore in the quarter to June. Margins calculated as sales minus expenses is expected to be lower in the quarter to September than the previous quarter "Mindtree has implemented a range of operational efficiency improvements and cost control measures. The savings derived from these initiatives may not be sufficient to offset the revenue slowdown in Q2 FY17," the company said in its filing after market hours. Mindtree stock had dropped to a 52-week low at Rs 546.25 during trading hours on the Bombay Stock Exchange on Friday, before closing 0.98% or Rs 5.45 lower to end at Rs 549.90. Indian IT service firms are facing multiple challenges due to currency volatility, project cancellations and reducing contract sizes due to uncertain business environment over Britain's decision to exit the European Union.

Infosys, the bellwether for IT services industry in July forecast lower growth than it expected in April, saw a key client shut down a project and sees business uncertainty continue from customers globally. Mindtree said it expects margins to be higher in the six months from October than the previous two quarters due to cost cutting measures. "The uncertainties in the Bluefin business are likely to continue for a few more months given the volatile macroeconomic environment in Europe," it said. "The slower revenue momentum in H1 FY17 will delay the aspiration to grow EBITDA margins over FY16. The cost saving measures and other related initiatives will help the company deliver a higher margin in H2 FY17 over H1 FY17. Even with this change in outlook, the company continues to expect its annual revenue growth to be higher than the Nasscom industry average." Industry body Nasscom expects Indian IT services firms to grow 10-12% this year despite uncertain business environment. Mindtree said that its business fundamentals, strategic direction and market positioning continue to look strong in the medium-term especially with its investments in Digital and Managed Services. "Business pipeline from its core services and Magnet 360 is amongst the strongest inthe last few years. The company is well-placed to win some of these opportunities, including some large ones to be awarded over the next few months," it said.

MONTHLY STAR

Business Standard Digital

Business Standard Digital Monthly Subscription
149.00  
subscribe
Complete access to the premium product
Convenient – Pay as you go
Pay using Master/Visa Credit Card & ICICI VISA Debit Card
Auto renewed (subject to your card issuer’s permission)
Cancel any time in the future
Requires personal information

What you get?

ON BUSINESS STANDARD DIGITAL

  • Unlimited access to all the content on any device through browser or app.
  • Exclusive content, features, opinions and comment – hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.
  • 18 years of archival data.

NOTE :

  • The product is a monthly auto renewal product.
  • Cancellation Policy: You can cancel any time in the future without assigning any reasons, but 48 hours prior to your card being charged for renewal. We do not offer any refunds.
  • To cancel, communicate from your registered email id and send the email with the cancellation request to assist@bsmail.in. Include your contact number for speedy action. Requests mailed to any other ID will not be acknowledged or actioned upon.

SMART MONTHLY

Business Standard Digital

Business Standard Digital - 12 Months
1499.00
subscribe
Get 12 months of Business Standard digital access
Single Seamless Sign-up to Business Standard Digital
Convenient - Once a year payment
Pay using an instrument of your choice - Credit/Debit Cards, Net Banking, Payment Wallets accepted
Exclusive Invite to select Business Standard events

What you get

ON BUSINESS STANDARD DIGITAL

  • Unlimited access to all content on any device through browser or app.
  • Exclusive content, features, opinions and comment – hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.

NOTE :

  • This product is a monthly auto renewal product.
  • Cancellation Policy: You can cancel any time in the future without assigning any reasons, but 48 hours prior to your card being charged for renewal. We do not offer any refunds.
  • To cancel, communicate from your registered email id and send the mail with the request to assist@bsmail.in. Include your contact number for easy reference. Requests mailed to any other ID will not be acknowledged or actioned upon.
First Published: Fri, September 02 2016. 20:10 IST
RECOMMENDED FOR YOU