Hold LTIMindtree; target of Rs 5340: Prabhudas Lilladher

Prabhudas Lilladher's research report on LTIMindtree

The revenue growth was broadly in line to our estimates of 0.8% QoQ CC, partly aided by a ramp up of a large deal ($450m) within Retail segment. The deal is expected to see further ramp up and achieve its full potential as it progresses through Q2. Surprisingly, the management remained cautious on BFS, hinting to account-specific weakness, rather than an industry-wide challenge. The growth performance of CMT (1.1% QoQ) and Manufacturing (0.4% QoQ) was also weak vs Consol business growth of 2% QoQ in USD. We believe the large deal ramp up would support the growth in the rest of the year, while we are also cognizant of the fact of the underlying demand weakness. Hence the growth beyond the scope of large deal would be limited. The askrate for a similar growth (FY25) in FY26 would be ~2% CQGR, which we believe is achievable, given the order inflows were elevated while rate of conversion remains stable. We are baking in CC revenue growth of 4.8% and 8.2% YoY in FY26E/FY27E, while keeping our margins unchanged. With that our EPS sees an upgrade of ~2% in FY26E/FY27E. We assign PE of 27x to FY27 EPS, valuations are largely capped. Retain HOLD.

Outlook

We are factoring in a USD revenue and earnings CAGR of 7% and 13%, respectively. The stock is currently trading at 26x its FY27E earnings, and we assign a target PE of 27x FY27E earnings to arrive at a target price of INR 5,340. Given the limited upside from current levels, we maintain our “HOLD” rating.

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LTIMindtree - 18072025 - prabhu