Mindtree Limited Q3 FY22 Earnings Conference Call Summary

Key highlights from Mindtree Limited (MINDTREE) Q3 FY22 Earnings Concall

Management Update:

• MINDTREE commented that its North America geography contributed 73% to its revenue, which was the highest, while APAC and Middle East had the least contribution of 8.4%. On the service lines, customer success contributed the most of 42.9%, while data and Intelligence contributed the least of 14.8%.

• The company also reported that it won one of the largest data and intelligence deals in the quarter. Also on the cloud space, MINDTREE won 10 deals on the back of a significantly expanded relationship with the hyperscaler.

• MINDTREE onboarded more than 4,500 headcount this quarter, taking its global headcount to more than 31,900. The company also commented that it expects its hiring momentum from campuses to increase by 40% to 50% through FY ’23.

Q&A Highlights:

• Vibhor Singhal of Phillip Capital asked about demand environment and deal flow. CEO Debashis Chatterjee said that even though entire deal flow or the strong demand environment might not be reflecting in the reported deal flow absolute numbers, but in the coming quarters, the revenue maximization part of that should definitely translate into higher revenues.

• On another question by Vibhor Singhal about strong margin expansion and lowered subcontracting cost, CFO Vinit Teredesai commented that subcontractor cost is one of the levers that had a good impact on the margin story. And that 20% plus EBITDA margin on a sustainable basis is what the company is always looking at, which helps expand margins.

• Manik Taneja of JM Financial Services asked about MINDTREE’s lower subcontracting costs contrary to its peers. CEO Debashis Chatterjee said that it’s due to the company’s disciplined strategy that they follow. However, he added that these costs might go up and down, but it will get rationalized over a period of time.

• On a query from Manik Taneja regarding the fresher intake in the next year, CFO Vinit Teredesai commented that around 1,500 freshers are getting added per quarter.

• Dipesh Mehta of Emkay Global asked about employee cost versus industry-wide attrition and related implication on cost structure. CFO Vinit Teredesai said that to ensure that the company’s employee cost base does not increase exponentially, the fresher addition strategy is going to be the key for MINDTREE.

• Dipesh Mehta also queried about the onsite/offshore mix and offshore mix reaching historically high levels. CFO Vinit answered that it has reached a peak level and there is less probability for it to go up from here.

• On another question from Mohit Jain of AnandRathi about the outlook on company’s top clients, CEO Debashis Chatterjee commented that YoY the company’s top client has grown 17% and the next set of two to 20 clients has grown 41%. This indicates the strategy of growing the top client is intact.