Mindtree is a mid-size IT services company.
Strategy:
– Focus on large clients and increase revenue from each client
– Focus on building long-lasting relationships with major clients
– Focus on 4 key business segments
– 35% of its revenue comes from digital business
– Growth from its top clients is one of the best in the industry
Clients:
– Top 10 clients accounted for 46% of its total business
– 6 clients in the $25-million category
– 15 clients in the $10-million category
– Microsoft is one of its top clients
– Key clients in the digital space include Microsoft, Unilever and P&G
– Key clients in the Salesforce space include Nike, Honeywell and Cargill
Management:
– Trustworthy and reliable management
– Growth rate is better than industry average
– 5x return in the last 5 years
– Exited mobile handset business (wrong bet)
Employees:
– Employee friendly company
– Attrition rate is one of the lowest in the industry
Acquisitions:
– UK based Bluefin Solutions, specializes in SAP HANA
– US based Relational Solutions, an analytics provider, primarily for consumer goods
– US based Magnet 360, a Salesforce consulting partner
– India based Aztecsoft, a product engineering business
Risks:
– Indian IT is at an inflection point
– Highly commoditized industry
– Highly competitive market
– Industry growth is slowing down
Valuation:
At current price of Rs 565, the rate of return is 8.4% based on pre-tax earnings to market cap and the dividend yield is 2.8%.
Appendix:
Scorecard:
10-Year Analysis:
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