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HDFC Securities Institutional Equities
LTIMindtree Ltd.'s growth deceleration has been impacted by higher exposure to banking, financial services and insurance (with potential for deterioration due to client-specific factors), sub-optimal large deal pipeline and extended period of integration reflected in continued executive attrition.
While the medium-term hypothesis for growth premium to tier-I peers remains, the earnings cut reflects the near-term growth challenges and delayed margin recovery.
We met the management recently and expect LTIMindtree's rate of recovery to be gradual, impacted by a ‘weak exit' to FY24E. While we lower our optimism, the outlook remains constructive for LTIMindtree due to its strong technology credentials and partnerships supporting its position as a challenger to larger tier-Is, sub-vertical expertise, a strong track record of large client mining, and margin improvement potential.
Maintain Add on LTIMindtree with a revised target price of Rs 5,630, based on 25 times FY26E.
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