LTIMindtree Q3 Results Review - Inline Operating Performance; Expects Growth To Bounce Back: Yes Securities

Yes Securities Report

LTIMindtree Ltd. reported inline financial performance for the quarter. Both, the revenue growth and Ebit margin were as per expectation. It reported constant currency growth of 0.7% QoQ, led by manufacturing vertical (up 20.1% YoY); banking, finanical services and insurance vertical (down 1.4% YoY).

On reported basis, revenue grew by 1.2% QoQ in Indian rupee terms (up 0.8% QoQ in USD terms). There was sequential decline in Ebit margin (down 61 bps QoQ) led by impact of increase in selling, general and administrative expenses.

Employee attrition continues to moderate as last twelve months attrition decreased by 100 bps QoQ to 14.2%.

The near term demand environment remains challenging as 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 Q4 FY24 led by robust deal booking and strong deal pipeline.

LTIMindtree's employee attrition is expected to come down going ahead and should support operating margin.

We estimate revenue compound annual growth rate of 16.4% over FY23‐26E with average Ebit margin of 17.4%.

We maintain our 'Buy' rating on the stock with revised target price of Rs 7,585/share at 31.0 times on FY26E earnings per share.

The stock trades at PER of 29.6 times/25.7 times on FY25E/FY256 EPS.

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