LTIMindtree shares crash 6% after Q3 results; brokerages flag margin risks, near-term earnings concerns

LTIMindtree

• LTIMindtree shares drop 6% after cautious brokerage reviews on Q3 results.
• Net profit fell 12% YoY due to a one-time labor code charge of Rs 590 crore.
• Brokerages noted margin concerns but highlighted strong deals and AI strategy.

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Shares of LTIMindtree Ltd fell sharply in early trade on Tuesday, slipping over 6 percent, as investors reacted to mostly cautious brokerage reviews following the company’s Q3 FY26 results. Analysts flagged concerns around margins and near-term earnings visibility despite largely in-line performance.

The stock was trading at Rs 6,012.5 in morning deals, down 6.2 percent on the day. Over the past one year, LTIMindtree shares have gained just over 3 percent, significantly underperforming the benchmark Nifty 50, which is up about 9 percent over the same period.

Brokerages said that LTIMindtree delivered an in-line quarter, but diverged on the outlook and valuation comfort.

CLSA reiterated its ‘Outperform’ rating with a target price of Rs 7,067 per share, implying an upside of over 17 percent. The brokerage expressed confidence in the company’s guidance for a return to double-digit revenue growth by Q4 FY26. CLSA pointed out strong large deal wins across BFSI, public markets, and consumer and media segments, noting that deal ramp-ups should offset productivity gains from AI adoption. However, it flagged limited scope for near-term re-rating, arguing that future upside will be driven primarily by EPS growth rather than valuation expansion.

Morgan Stanley maintained an ‘Equal-weight’ stance with a target price of Rs 6,300, citing positives such as growth in a top hi-tech client and signs of BFSI bottoming out. At the same time, it cautioned that near-term margin pressure remains a concern, resulting in a balanced risk-reward at current valuations.

More cautious views came from Nomura and Citi. Nomura retained a ‘Neutral’ rating with a target price of Rs 5,900, pointing to a Q3 performance ranging from in-line to a modest miss, with EBIT margin at 16.1 percent coming in below estimates. It also flagged the one-time labour law provision of Rs 590 crore as a key drag.

Citi, which has a ‘Sell’ call and a target price of Rs 5,415, said revenue was aided by seasonal pass-throughs and margins benefited from lower SG&A expenses, but warned that upcoming wage hikes could dent margins by around 100 basis points over Q4 and Q1.

LTIMindtree on Monday reported a 12 percent year-on-year decline in net profit to Rs 960 crore for the December quarter, largely due to a one-time labour code-related charge of Rs 590.3 crore. Sequentially, profit fell over 30 percent. Revenue rose 11 percent year-on-year to Rs 10,781 crore, while operating margin improved 20 basis points sequentially to 16.1 percent. Excluding the labour code impact, net profit would have grown 29 percent year-on-year, the company said.

Management commentary remained constructive, with CEO and MD Venu Lambu highlighting strong deal momentum, AI-led strategy execution, and a third consecutive quarter of over 2 percent sequential growth.

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