Mindtree lowers revenue guidance for second quarter

Bengaluru: Leading IT services firm Mindtree on Friday lowered its sequential revenue guidance for the second quarter (July-September) of fiscal 2016-17.

“We expect revenue for Q2 FY17 to be lower than the previous (first) quarter due to cross-currency movements, project cancellations and slower ramp-ups in a few large clients across verticals and weakness in our British subsidiary Bluefin,” the city-based company said in a regulatory filing to the BSE.

The 17-year-old firm, promoted by former Wipro executives, reported Rs 1,328-crore consolidated revenue and Rs 124-crore net profit for the first quarter (April-June) this fiscal.

“Margins are also going to be lower than planned, with a decline in Ebitda (earnings before interest, tax, depreciation and amortisation) in second quarter compared to first quarter,” said the company in the filing.

Though measures to improve operational efficiency and control cost have been initiated, the company said the savings may not be sufficient to offset the revenue slowdown in the current (Q2) quarters.

“The uncertainties in the subsidiary (Bluefin) business are likely to continue for a few more months given the volatile macroeconomic environment in Europe,” the filing pointed out.

The slower revenue momentum in the first half (H1) of this fiscal (April-September) will also delay the company’s aspiration to grow its Ebitda margins over the last fiscal (FY 2016).

The company, however, believes its business fundamentals, strategic direction and market positioning look strong in the medium-term, especially with investments in digital and managed services.