LTIMindtree Q1 Review: Here's What Held Back Analysts Ratings Upgrade Despite Earnings Beat
Morgan Stanley expects the company to maintain the growth and margin momentum.
Brokerages remain bullish on LTIMindtree Ltd., post first quarter results. Morgan Stanley maintains equal-weight with target price of Rs 5,400, while Macquarie maintains outperform with target price of Rs 6,200.
Morgan Stanley expects the company to maintain the growth and margin momentum. "Most of the peers that have reported so far have seen sharper earnings cuts, and hence LTIM has done well from that perspective this quarter," it added.
The brokerage noted that the current price implies a two year forward P/E of approximately 26.6 times, which is at a premium of 27% versus TCS's two year forward P/E and hence provides limited upside potential.
Morgan Stanley noted that the management commentary could have been more bullish if macro were more supportive.
"Based on the results and management commentary, the brokerage tweaked the revenue and margin estimates, which leads to limited changes of +1.3%/-0.5%/-0.9% to its F26/F27/F28 EPS estimates," it added.
LTIMindtree’s net profit rose 11% sequentially in the first quarter of this fiscal to Rs 1,254 crore, as compared to Rs 1,129 crore in the year-ago period, according to the consolidated results declared by the company on Thursday.
The bottomline posted by the IT firm has met the consensus estimate of analysts tracked by Bloomberg.
LTIMindtree Q1 Results Highlights (Consolidated, QoQ)
Revenue up 0.7% at Rs 9,841 crore versus Rs 9,772 crore (Bloomberg estimate: Rs 9,855 crore)
EBIT rises 4.5% to Rs 1,407 crore versus Rs 1,345 crore (Estimate: Rs 1,315 crore)
Margin expands to 14.3% versus 13.8% (Estimate: 14%)
Net profit up 11% at Rs 1,254 crore versus Rs 1,129 crore (Estimate: Rs 1,194 crore)
Macquarie noted that the company has reported the best growth among peers so far.
The brokerage noted that the tech segment segmental EBIT margin declined by 190 bps quarter-on-quarter/ 290 bps year-on-year. It further highlighted that the rest-of-world declined 6% in quarter-on-quarter.
"LTIM management suggested that it expects to continue growth in Q2FY26 while continuing to improve EBIT margin," the brokerage said.
