Buy LTIMindtree; target of Rs 7000: Motilal Oswal

Motilal Oswal is bullish on LTIMindtree has recommended buy rating on the stock with a target price of Rs 7000 in its research report dated July 18, 2024.

Broker Research

July 23, 2024 / 13:12 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on LTIMindtree

LTIMindtree (LTIM) reported a strong 1QFY25 revenue growth of 2.6% QoQ/ 3.7% YoY in constant currency (CC) vs. our estimate of ~1% QoQ in CC. In USD terms, revenue came in at USD1.1b (up 2.5% QoQ/3.5% YoY), which was slightly above our estimate of USD1.07b. EBITDA grew 4.6% QoQ but declined 1.8% YoY to INR16.1b (in line with our estimate of INR15.8b). PAT came in at INR11.3b, up 3.1% QoQ/down 1.5% YoY and below our estimate of INR11.6b. Deal wins were slightly subdued at USD1.4b (up 0.7% QoQ).  LTIM's commentary was particularly encouraging among the companies that have reported so far. Clients are finally resuming the "high-priority transformation" projects, primarily focusing on areas such as data engineering, data estate modernization, and ERP modernization. Following a prolonged period of subdued client activity, this development sets a positive stage for pre-GenAI investments, with promising implications for FY26. Although cost-reduction initiatives remain a top priority, there is now a possibility of reinvesting technology dollars into pre-GenAI expenditures, and LTIM will benefit from this uptick.

Outlook

We expect LTIM to deliver a CAGR of 8.0%/13.4% in USD revenue/INR PAT overFY24-26. We broadly maintain our FY25E EPS and raise our FY26E EPS by 2.8%.We also upgrade our target multiple to 35x (this is now at 1STD above LTIM’s five-year average). Our revised TP of INR7,000 implies 26% upside potential.

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