Bengaluru-based Mindtree had said that the company expects its second quarter revenue to be lower than the previous quarter. Analysts regard Mindtree s revenue warning for the September quarter as indicator of a difficult FY 2016-2017 for the Indian IT sector. Mindtree expects lower revenue because of impacts by cross-currency movements, project cancellations and slower ramp-ups in a few large clients across different verticals. After the forecast, shares of Mindtree fell sharply by 8.25 percent in intra-day trade before closing at Rs 521.70, still down by 5.13 percent, at the Bombay Stock Exchange. Also Read - Why Indian engineers are missing the mark for the jobs they set out to pursueAlso Read - IT department warns taxpayers about fake SMS phishing attacks: Report
Mindtree’s warnings confirm our thesis of a difficult FY17 (and most likely H1FY18) for the sector as a whole, Emkay said in a note. Noting that Mindtree was hopeful of improvement in the second half of the fiscal, Emkay said it continues to see downside risks to overall industry growth . We believe Mindtree’s revenue outlook is optimistic and could see a downward revision… Growth challenges and margin pressures are becoming more evident for Mindtree, Religare said. The Bengaluru-based company had posted a 3.7 percent drop in consolidated net profit at Rs 123.5 crore in the June quarter that witnessed “strong winds” in the form of slower project ramp-ups and loss from its Bluefin business.
Citing challenges in the global environment arising out of the UK’s exit from the European Union, Mindtree had said it expects strong revenue growth from the third quarter beating industry average. Its revenues for the first quarter grew 35.8 percent to Rs 1,327.6 crore in the quarter under review from Rs 977.5 crore in the year-ago period.
IT companies Infosys and Wipro disappointed the street with their muted first quarter numbers and said they were facing unanticipated headwinds and slower project ramp-ups in large deals. However, industry body Nasscom has said there is no immediate reason to revise forecast of 10-12 percent revenue growth in IT exports for FY17. ALSO READ: Industry veteran T V Mohandas Pai predicts India s IT revenue growth at 9 to 10 percent