Buy LTIMindtree; target of Rs 6190: YES Securities

YES Securities is bullish on LTIMindtree has recommended buy rating on the stock with a target price of Rs 6190 in its research report dated July 17, 2023.

Broker Research

July 18, 2023 / 16:32 IST

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YES Securities' research report on LTIMindtree

LTIMindtree (LTIM) reported mixed financial performance for the quarter. While, the revenue growth was slightly below estimate, EBIT margin came above expectation. It reported constant currency growth of 0.1% QoQ, led by BFSI vertical (up 12.1% YoY); Manufacturing and Resources (up 14.9% YoY). On reported basis, revenue grew by 0.1% QoQ in INR terms (up 0.1% QoQ in USD terms). There was sequential improvementin EBIT margin(up 32 bps QoQ) led by lower SG&A cost. Employee attrition continues to moderate as LTM attrition decreased by 240 bps QoQ to 17.8%. The multiyear tech adoption cycle broadly remains intact led by adoption of cloud and data analytics. However, the clients remain cautious regarding the evolving macroeconomic situation and are taking more time for decision making, thus resulting in slowdown in discretionary IT investments. This continues to impact near term revenue performance. We expect revenue growth to pick up from H2FY24 led by robust deal booking and strong deal pipeline. Employee attrition is expected to come down going ahead and should support operating margin. We estimate revenue CAGR of 14.4% over FY23‐25E with average EBIT margin of 17.9%.

Outlook

We maintain our BUY rating on the stock with revised target price of Rs 6,190/share at 29.0x on FY25E EPS. The stock trades at PER of 30.0x/24.1x on FY24E/FY25E EPS.

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