Hold LTIMindtree; target of Rs 4700: Emkay Global Financial

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26 Aug, 2025 12:21

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Emkay Global Financial's research report on LTIMindtree

Q3 revenue growth is likely to be impacted by the higher-than-usual furloughs, lower number of working days at onsite, and elimination of related-party revenue between LTI-MTCL (~0.4% in FY22). LTIM is seeing delay in decision-making in Retail & CPG, Hi-tech and E&U. Mgmt expects a weaker margin trajectory in H2 due to moderation in the revenue growth momentum and anticipated one-off costs related to the merger & business mix (higher passthrough revenue in H2). Mgmt indicated that one-off costs are likely to be 100-150bps in Q3. Near-term performance is likely to be impacted by the worsening macro, merger integration costs, and weak cash-conversion due to delayed billing. However, the combined business offers a well-diversified portfolio, improved large-deals participation with scale, end-to-end capabilities and cross-sell opportunities that would help in sustaining revenue growth on a larger scale.

Outlook

We remain positive on the medium-to-long term growth prospects of LTIM; but the current valuation offers limited upside and integration presents some challenges in talent retention, margin trajectory and cash conversion in the near term. We roll forward our valuations to Dec24E and maintain HOLD with TP of Rs4,700/share at 23x Dec-24E EPS.

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LTIMindtree - 12 -12-2022 - emkay