LTIMindtree Share Price Hits Over One-Month High, Citi Sees Firm Adapting To Industry Changes

LTIMindtree Ltd.'s share price rose to hit its highest level in more than a month tracking Citi Research's comments post an analysts' meet. The company seems to be adapting to the industry changes relatively well and is showcasing better EBIT growth, Citi said.

However, the brokerage has maintained its 'sell' rating on the stock and target price of Rs 5,710 per share, implying downside of 8.2%, given its concerns around revenue growth and the margin improvement trajectory.

Demand environment remains cautious as discretionary spends have not returned, Citi said. "Spends are happening on cost takeout, vendor consolidation, regulatory work, AI ready investments etc.," it noted.

According to the brokerage, the company has an ambition of $10 billion or Rs 84,471 crore revenue target from current levels, largely driven by strong foundation as BFSI and technology verticals are well scaled, horizontal capabilities, marquee client base, top tier partnership.

Strategic pivot infuse AI in everything, AI at scale, turbocharged portfolio – dominate in BFSI & Technology (largest verticals) and acceleration in Manufacturing, Resources, Healthcare, Life sciences, Consumer business verticals, along with strategic acquisitions also help the company achieve this target, Citi said.

The brokerage said margin trajectory will depend on revenue growth and matching the right role to the right price, optimising pyramid by reducing attrition and impact of replacing hiring, investments in automation and AI, and keeping checks on discretionary spends. "EBIT margin target of 17% to 18% can be achieved faster if revenue grows double digit and sustains," it said.

Upside risks to Citi's thesis include large deal momentum picking up further, sustained Rupee depreciation, and better-than-expected billing rates.

Share price of LTIMindtree rose as much as 0.98%, the highest level since Oct. 18. It pared gains to trade flat at Rs 6,225.90 apiece, as of 12:04 p.m. This compares to a flat NSE Nifty 50.

The stock has fallen 1% on a year-to-date basis, but risen 12% in the last 12 months. Total traded volume so far in the day stood at 0.52 times its 30-day average. The relative strength index was at 60.94.

Of the 42 analysts tracking the company, 22 maintain a 'buy' rating, eight recommend a 'hold' and 12 suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 3.4%.