Accumulate LTIMindtree; target of Rs 6040: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on LTIMindtree with a target price of Rs 6040 in its research report dated July 18, 2024.

Broker Research

July 18, 2024 / 14:30 IST

Accumulate

Prabhudas Lilladher's research report on LTIMindtree

LTIM reported robust revenue growth of 2.6% QoQ CC (USD 2.5% QoQ), ahead of our estimates of 1.9% CC & consensus (1.6% QoQ). The growth was broad-based across key verticals and geographies with TMC and NA grew 7.9% and 4.4% QoQ, respectively. EBIT margin reported at 15.0% in Q1, up 30 bps (in-line with our est.). The margin expansion was limited despite having recovered Q4 one-off impact (+100bps) due to additional headwinds of higher visa costs & marketing expenses, impacted margins by -50bps QoQ each. Deal wins during the quarter was flattish at US$1.4 bn vs US$1.5 bn in Q4FY24.

Outlook

With strong execution strategy and robust sales engine, LTIM is well positioned to play in the challenging environment with a mix of cost and transformation programs. We are baking in revenue/earnings CAGR of 8.3% and 14.0%, respectively. We believe, the CMP factors-in all the positive and leaving no room for potential upside. It is trading at 27x FY26E (average 10-year 25x PE). We are assigning P/E of 30x to FY26E with a target price of INR 6,040. Maintain ACCUMULATE.

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