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Yes Securities Report
LTIMindtree Ltd. 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 banking, financial services and insurance vertical (up 12.1% YoY); manufacturing and resources (up 14.9% YoY).
On reported basis, revenue grew by 0.1% QoQ in Indian rupee terms (up 0.1% QoQ in U.S. dollar terms). There was sequential improvement in Ebit margin (up 32 basis points QoQ) led by lower selling, general and administrative cost.
Employee attrition continues to moderate as last twelve months attrition decreased by 240 basis points 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 H2 FY24 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 compound annual growth rate of 14.4% over FY23‐25E with average Ebit margin of 17.9%.
We maintain our 'Buy' rating on the stock with revised target price of Rs 6,190/share at 29.0 times on FY25E earnings per share. The stock trades at price-to-earnings ratio of 30.0 times/24.1 times on FY24E/FY25E EPS.
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Also Read: LTIMindtree Q1 Results Review - Revenue Miss; Low Visibility Leads To Weaker Outlook: Dolat Capital
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