Shares of LTIMindtree are under immense pressure in trade on Tuesday after the company reported its third-quarter earnings for the ongoing financial year. The stock is currently trading at Rs 6,010, which accounts for a correction of over 6%, compared to Monday's closing price of Rs. 6,407.
LTIMindtree reported a sequential fall in profit in the third quarter of the current fiscal due to the one-time impact of new labour codes, even as operating margin rose and revenue met estimates.
Consolidated revenue from operations rose nearly 4% to Rs 10,781 crore in the October-December quarter, according to a stock exchange filing on Monday. Analysts' consensus estimates compiled by Bloomberg projected Rs 10,726 crore.
Net profit tanked by nearly a third to Rs 971 crore. The company had to make a provision of Rs 590 crore to implement changes under the new labour codes introduced by the government during the quarter.
LTIMindtree Q3 Results (Cons QoQ)
- Revenue up 3.7% at Rs 10,781 crore versus Rs 10,394 crore (Bloomberg estimate: Rs 10,726 crore)
- EBIT up 5.4% at Rs 1,737 crore versus Rs 1,648 crore (Bloomberg estimate: Rs 1,706 crore)
- Margin at 16.1% versus 15.9% (Bloomberg estimate: 15.84%)
- Profit down 31% at Rs 971 crore versus Rs 1,401 crore (Bloomberg estimate: 1,413 crore)
In light of LTIMindtree's quarterly earnings, brokerages offered mixed views on the counter. While Morgan Stanley marginally hiked the target price, Citi did the opposite.
In its latest note, Citi pointed out that headline EBIT is slightly ahead while revenues are aided by seasonal pass-through. But more importantly, the brokerage firm noted that valuations at 31 times price to earnings by FY27 are relatively high, when compared to its large-cap peers.
Citi also noted the wage hike impact, which has cost top Indian IT firms over Rs 5,000 crore in profit in the third-quarter.
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