LTIMindtree Ltd's shares opened nearly 2 percent lower on April 25 after several brokerages cut the target price for the stock following its underwhelming performance in the quarter ended March. While maintaining their ratings, Morgan Stanley, HSGC, CITI Research, and JP Morgan reduced their target prices for LTIMindtree. CITI Research issued the lowest revised target price for LTIMindtree shares, reducing it to Rs 4,165 from Rs 4,725, whereas HSBC maintained the highest target price view at Rs 5,380.
At 09.24 am, LTIMindtree's shares traded 1.5 percent lower at Rs 4,656. On a year-to-date basis, the stock has declined by 24 percent.
In terms of financials, the company's consolidated net profit for January-March decreased by 5.9 percent sequentially to Rs 1,100.7 crores, missing Moneycontrol's estimate of Rs 1,143.13 crore. Additionally, the company's revenue for the same period declined by 1.4 percent quarter-on-quarter to Rs 8,892 crore, surpassing Moneycontrol’s estimates of Rs 8,971 crore.
Analysts expressed concerns regarding the company's margin performance, noting a lack of recovery in the key metric. The EBIT margin, or operating margin, decreased sequentially to 14.7 percent in the March quarter from 15.4 percent in the previous quarter. The March quarter's EBIT margin fell short of Moneycontrol's estimate of 15.7 percent. LTIMindtree is also yet to achieve its targeted 17-18 percent margin.
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LTIMindtree's margin may face more headwinds than tailwinds, said Morgan Stanley in a note. While both Morgan Stanley and Nomura anticipate the company's growth to resume from Q1 FY25, they differ in their expectations for FY25 growth. Morgan Stanley predicts a significant growth uptick in FY25, whereas Nomura said that growth acceleration is unlikely in FY25. The company management, however, was slightly more positive on FY25 growth, pointed out HSBC.
In terms of revised projections, Nomura lowered its FY24-26 EPS by nearly 4-8 percent for LTIMindtree, while JP Morgan reduced the revenue target by 1-3 percent and margins by 30-40 basis points over FY25-26.
CITI Research was of the view that LTIMindtree's valuations remain premium, and the stock is the most expensive largecap IT stock, along with Tata Consultancy Services.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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