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Mindtree Q3 profit jumps 58.6%; acquires solutions firm in US

NEW DELHI: Mindtree's December quarter earnings were little changed from the preceding three-month period due to lower volume growth on account of fewer working days in a seasonally weak quarter. Profits got hit by crosscurrency volatility.

Revenues inched up 0.4% sequentially to $148 million, while net profit grew 0.3% to $23 million. The company's banking, financial services and insurance practice saw a 3.5% improvement, helped by 4.5% growth in the US. Operating margin improved 70 basis points to 20.5%. "Our ability to drive significant optimisation in our chosen verticals, in IT (information technology) and application management remains a strong foundation for delivering sustained value to our clients," chief executive Krishnakumar Natarajan said in a statement.

The attrition rate rose to 18.1% from 15.7%, forcing the management to put in place measures to stem the tide. It did not elaborate further.

The company also bought Discoverture Solutions, a US-based IT services company that offers solutions to clients in the property and casualty insurance space, for $15 million, thereby strengthening Mindtree's presence in the insurance space. Mindtree BSE -4.07 % will fund the acquisition from internal accruals, payable over 18 months, and the company said it will get 15 customers from Discoverture, which has a revenue run rate of $3.5 million a quarter. The deal is expected to close in four weeks.

The company said that it will "comfortably" end the year with growth above the upper guidance given by industry lobby group Nasscom of 13-15% growth for fiscal year 2014-15. This could bring some cheer to the street after ET reported on January 19 that Nasscom conceded that the $118 billion information and business process management industry in 2014-15 will not be able to meet with its upper band of its earlier guidance.