MINDTREE

INDUSTRY: IT

Shareholding pattern

Bloomberg Code MTCL IN Promoters% 32.47

Reuters Code MINT.BO
NSE Code MINDTREE FII% 28.43
MktCap (Cr) 2193 Others% 39.1
52 Wk H/L (Rs) 729/405
Face Value (Rs) 10

Company overview
MindTree started in 1999 by 10 industry professionals, who came from Cambridge Technology
Partners, Lucent Technologies and Wipro. The founding team was led by Ashok Soota who was
at that time vice chairman and president of Wipro, one of India's largest software companies.

MindTree is global IT Solutions Company specializing in IT Services, Independent

Testing, Infrastructure Management and Technical Support (IMTS), Knowledge Services and
Product Engineering, which comprises of R&D Services, Software Product Engineering and
Wireless Products.

MINDTREE’S VISION
MindTree has set up an ambitious target of becoming a $1-billion (around Rs 4,600- crore)
company by 2014. The company achieved revenue of $269 million (Rs 1,237 crore) for the
FY09. The run-rate required to achieve $1-billion revenue is over 35% as against, the IT sector is
expected to grow only 12-13% for FY11E.

Similar kind of ambitious target ($200 million (around Rs. 960 cr) in five years) was set by
MindTree when it was just three years old with$18 mn revenue. But, they nearly reached the
target of it with the growth of 11 times.

MindTree has identified Middle East IT services market, as one of its fastest growing regions,
which is expected to hit US$ 3.5 billion by 2011, according to recent reports from the Economist
Intelligence Unit (EIU). MindTree sees the Middle East region to play a key role in its plan to
become a US$ 1 billion organization.
Key Customers

Some of the clients of MINDTREE LTD.

Arcelor Mittal, Google, Unilever, SONY, Microsoft, CISCO, American Airlines, AOL,
Franklin Templeton, Yahoo, Symantec, SIEMENS, Renault Trucks, P&G, Kodak

Acquisitions

MindTree has made 5 acquisitions, which helped them to enter into new service lines.

Targeted Companies Date Service line

ASAP Solutions Oct-04 SAP Implementation and

Maintenance
Linc Software Services May-05 Application Development
and Maintenance
TES-PV Nov-07 Strengthen IC Design team

Aztecsoft May-08 Expand in Product

Engineering and Testing
Kyocera Wireless Sep-09 Entry into Mobile Product
Business
Consolidated Financial Highlights for the FY 2009-10

 Revenue for the year was $272.3 Million against guidance of $269.5-270.5 Million; PAT
was $45.1 Million against guidance of $40.5-41.25 Million; EPS was Rs 52.8 against
guidance of Rs 48.6-49.5.

 In rupee terms, In FY10, Mind Tree’s revenue increased 4.7 per cent to Rs 1,296 crore, while
the net profit trebled to Rs 214.8 crore i.e. PAT increased by 310.7% over the previous year.

 In dollar terms, Revenue grew by 1.2% over the previous year to $272.3 Million. PAT
increased by 294.2% to over the previous year to $45.1 Million.

 Earnings per share (EPS) stood at Rs 52.8 on a fully diluted basis, compared to Rs 13.7 in
the previous year, which is a growth of 285.3%.

 The company has seen an increase in realisations of close to 7.7 per cent onsite and 2.3
per cent offshore over the course of the last few quarters.

 Mind Tree’s top five clients have increased contribution to revenues, suggesting that
ramp-up in volumes is well under way, a fact reinforced by a repeat business proportion
of 99.1 per cent.

 The company has also seen an addition of large clients ($10 million) over the course of
the last fiscal.

 The company also has an enviable revenue-mix with 71.9 per cent revenues from services
delivered from offshore locations (largely India). This proportion is among the best in the
industry.
Other FY 2009-10 Highlights

-As of March 31, 2010, company had 258 active customers, including 40 Global Fortune 500
Companies.

-The MindTree Customer Experience Survey of 2009 reinforced the high customer satisfaction
levels achieved by MindTree over the years. The survey indicates that 90% of customers gave a
rating of 4 and above (on a scale of 5) on overall satisfaction. In addition, 95% and 91% of them
rated 4 and above (on a scale of 5) on their willingness to do repeat business and to recommend
us, respectively.

-In September 2009, MindTree acquired Kyocera Wireless India Pvt. Ltd. and subsequently
launched a new business called Next in Wireless, marking its entry into the development of
ready-to-brand mobile handset products and Intellectual Property in the area of cellular
infrastructure.

-The Board has recommended a final dividend of Rs 2 per share, which includes a special
dividend of Re 1 per share on the occasion of Mind Tree’s 10th Anniversary.

Factors favoring MindTree:

Strong Management Team

Diversified Player with rich Clients relationship
Increasing discretionary spending in IT space and R&D service
Outlook for FY 2011

-MindTree IT Services, R&D Services and SPE Services businesses are expected to deliver
higher than the NASSCOM-estimated industry growth rates of 13-15%, and will broadly
maintain the current margins.

-Companies Next In Wireless (NIW) business is developing a ready to brand 3G smart phone
and IP in the area of cellular infrastructure. Company expects to launch these products to the
market in Q3/Q4 of 2010-11. Since this is a new initiative, the financial performance of the NIW
business would depend on the success of the products when they are launched.

Acquisitions and incubating new business ideas is the way forward for MindTree. On the back of
diversification into various segments, strong financial performances, and positive sectoral
outlook, MindTree become a good investment opportunity.

MindTree Ltd has informed regarding a Press Release dated June 03, 2010 titled "MindTree
Announces Trade Promotions Analytics Solution for Consumer Packaged Goods Industry"

Other Key Metrics

Geographical revenue

Countries FY09 Q110 Q210 Q310 Q410

US 65.3% 67.3% 66.2% 64.4% 62.8%

Europe 19.7% 19.8% 21% 18.4% 18.7%
India 6.3% 6.5% 5.3% 6.4% 6.3%
Rest of World 8.7% 6.4% 7.5% 10.8% 12.2%

Clients Concentration

Particulars FY09 Q110 Q210 Q310 Q410

Revenue from 6.7% 7.0% 7.8% 7.2% 7.2%

top client
Revenue from 5 24.6% 26.4% 26.9% 28.4% 27.9%
top client
Revenue from 37.2% 39.4% 39.7% 40.5% 10.4%
10 top client
Revenue Mix

Particulars FY09 Q110 Q210 Q310 Q410

Onsite 29.8% 29.2% 28.9% 27.5% 28.1%

Offshore 70.2% 70.8% 71.1% 72.5% 71.9%

Peer Comparison

COMPANY EV/EBIDTA ROE ROCE D/E

MINDTREE 7.34 35.4 37.8 0.12

INFOTECH 1.92 11.6 10.2 0.04
ENTERP.
CORE PROJ 5.9 19.8 17.3 0.48
PATNI COMP. 9.04 19.0 20.6 0.00
POLARIS Soft. 2.4 17.2 19.6 0.00

Industry Outlook:

According to a report prepared by McKinsey for NASSCOM, the exports component of the
Indian industry is expected to reach US$ 175 billion in revenue by 2020. The domestic
component will contribute US$ 50 billion in revenue by 2020. Together, the export and domestic
markets are likely to bring in US$ 225 billion in revenue, as new opportunities emerge in areas
such as public sector and healthcare and as geographies including Brazil, Russia, India, China
(BRIC) and Japan opt for greater outsourcing venue.
Income statement

Particulars 201003 200903 200803

INCOME :
Operating Income 1295.98 1237.47 739.79
Net Operating Income 1295.98 1237.47 739.79
Other Income 77.46 14.31 28.98

Total Income 1373.44 1251.78 768.77

EXPENDITURE :
Operating Expenses 75.4 59.55 33.78
Employee Cost 784.29 636.34 435.66
Power/Electricity Charges 15.8 15.17 10.65
Selling and Administration Exp. 155.87 176.66 127.23
Miscellaneous Expenses 18.94 225.91 7.7

Total Expenditure 1050.3 1113.63 615.02

Operating Profit 323.14 138.15 153.75

Interest 3.28 18.07 6.32
Gross Profit 319.86 120.08 147.43
Depreciation 65.18 56.96 35.6
Profit Before Tax 254.68 63.12 111.83
Tax 36.95 13.53 12.89
Deferred Tax 2.87 -6.81 -4.35
Net Profit 214.86 56.4 103.29
Minority Interest (after tax) 0 4.1 0
Net Profit after Minority Interest & P/L
Asso.Co. 214.86 52.3 103.29
Extraordinary Items 0.88 1.93 2.29
Adjusted Net Profit 213.98 50.37 101
Consolidated Balance Sheet

Particulars 201003 200903 200803

SOURCES OF FUNDS :
Share Capital 39.51 38 37.92
Reserves Total 631.12 513.28 495.16
Equity Application Money 0 0 0.05
Total Shareholders’ Funds 670.63 551.28 533.13
Minority Interest 0 32.76 0
Secured Loans 0 137.57 91.89
Unsecured Loans 3.05 1.8 0
Total Debt 3.05 139.37 91.89

Total Liabilities 673.68 723.41 625.02

APPLICATION OF FUNDS :
Gross Block 529.92 640.14 379.58
Less: Accumulated Depreciation 253.29 210.96 118.91

Net Block 276.63 429.18 260.67

Capital Work in Progress 24.66 13.04 23.29
Investments 127.25 101.33 139.52

Current Assets, Loans & Advances

Sundry Debtors 236.99 279.23 175.62
Cash and Bank 52.32 48.76 55.3
Loans and Advances 194.83 141.11 94.87
Total Current Assets 484.14 469.1 325.79
Less : Current Liabilities and Provisions
Current Liabilities 211.35 285.99 116.21
Provisions 49 22.23 17.02
Total Current Liabilities 260.35 308.22 133.23
Net Current Assets 223.79 160.88 192.56
Deferred Tax Assets 21.35 18.98 8.98
Net Deferred Tax 21.35 18.98 8.98
Total Assets 673.68 723.41 625.02
Contingent Liabilities 12.33 4.32 5.06
Ratios

Particulars 201003 200903 200803

Key Ratios
Debt-Equity Ratio 0.12 0.22 0.12
Long Term Debt-Equity Ratio 0.12 0.22 0.1
Current Ratio 1.52 1.8 2.46

Turnover Ratios
Fixed Assets 2.94 2.75 3.03
Inventory 0 0 0
Debtors 5.65 5.23 5.07
Interest Cover Ratio 79.92 2.81 18.87
PBIDTM (%) 25.17 9.62 20.98
PBITM (%) 20.22 4.99 16.22
PBDTM (%) 24.92 7.84 20.12
CPM (%) 21.83 7.59 18.96
APATM (%) 16.87 2.96 14.2
ROCE (%) 37.81 7.8 21.89
RONW (%) 35.38 5.64 21.49