After two disappointing years, MindTree is back on track. COnsidering the performance of last 2 quarters, the stock is undervalued. With Rs 50 eps for the full year, it can easily cross 1000 by March...
MindTree has managed the downturn well, despite 2 of its largest customers going bankrupt! Mutual Funds now own a big chunk of MindTree. US has started growing again. just watch... March is not far off :)
Other points in favour of MindTree are 1) Experience in acquiring and integration 2)cash from this years profit 3) Existing infrastructure can accommodate headcount growth without additional infrastructure cost - no other mid-size company has these advantages.
The trailing eps for Mindtree is 50. Why is it misleading? The PE ratio that way comes out to ~13, though I also think it can easily command PE of 20 in the short term taking earnings growth into account, that is expected to be well above 20%. That way target price is 1000.
Trailing 12 months (q3-09 to q2-10)P/E is around 24, not 50, check the details in this website itself. TTM EPS is around Rs 26.5. Last year was lost due to their audacious hedging and resulting forex losses, that seems to have been rectified now. This year guidance is only an EPS of 38 to 44 which was revised downwards from the initial 50 gven in the beginning of the year. They have alredy done 25 in 2 quarters. If q3 and q4 are just flat, they should do Rs 50 EPS for the whole year. Even at he lower end of guidance, on an EPS of 38, stock should touch 750 by end of q4.
You are right traling eps is 25 and not 5o as i mentioned. I am sorry for that.
Looking at the way things are going expecting eps of 50 this financial year is not far fetched. Futher next year earnings should grow atleast at the rate of 20%-25%. Hence the scrip should touch 1000 in the next six months unless something goes terribly bad.
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