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IDBI Capital Report
LTIMindtree Ltd. reported subdued Q1 FY24 revenues mainly led by slow decision making, delay in ramp ups, slowdown in discretionary spend and banking.
While the company continues to win robust deals ($1.4 billion, 1.3 times book to bill) there is delay in conversion and ramp up. This uncertainty prompt us to revise FY24E revenue estimates to 8% YoY versus 9% YoY earlier.
However, LTIMindtree is winning large deals, multi-year deals and will be key beneficiary of deal ramp ups and deal conversions in improving macro.
Hence we have kept our 15% YoY growth assumption for FY25E.
In addition, we expect 143 basis points margin improvements over FY23-FY25E. This will lead to revenue and profit compound annual growth rate of 12% and 15% over FY23-FY25E.
Considering the recent run up in price, we maintain our 'Hold' rating on the stock and target price of Rs 4,975 (25 times FY25E earnings per share).
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