Accumulate LTIMindtree; target of Rs 4980: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on LTIMindtree with a target price of Rs 4980 in its research report dated April 24, 2025.

Broker Research

April 24, 2025 / 11:56 IST

Accumulate

Prabhudas Lilladher's research report on LTIMindtree

The revenue growth (-0.6% QoQ CC) was below our estimates (+0.3% QoQ CC), while margins were fairly in line, attributed to project closures and unanticipated delays in deal ramp ups. The new management is doubling down on three key initiatives to maximize revenues and improve profitability. The management expects new initiatives to start reaping benefits from Q1FY26, it expects Q1 to be a growth quarter with sequential improvement in margins. Despite having 34% dependency on tariff sensitive verticals (Manufacturing and Retail), the management sees continued engagement with top accounts without any prior notice on ramp down or pausing existing programs. It expects normal seasonality to continue in FY26 while the productivity benefits to its top account completed in Q4. We believe the uptick in order inflows USD 6.0b (+7.0% YoY) along with diverse mix of cost takeout, vendor consolidation and managed service deals should drive growth in FY26. Additionally, the continued conversion and engagement within Manufacturing and Retail space should drive better growth than that of peers. On the margins front, the new program “Fit For Future” should drive incremental agility and productivity though eliminating extra layer of costs. Additionally, the management strives to achieve non-linearity between revenue growth and headcount through AI and automation. We are baking in CC revenue growth of 4.7% and 7.8% YoY with margin improvement of flat and 50bps YoY in FY26E/FY27E.

Outlook

However, these positives are already priced-in and provide limited room for upside. We assign PE of 26x (28x earlier) to FY27 EPS. Downgrade to ACCUMULATE (BUY earlier).

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