LTIMindtree Q1 Results Review - Revenue Miss; Low Visibility Leads To Weaker Outlook: Dolat Capital

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Dolat Capital Report.LTIMindtree Ltd. reported constant currency revenue growth of 0.1% QoQ (our estimate: 2%), impacted due to delay in deal ramp-ups in banking, financial services and insurance and retail. Operating profit margin expanded by 30 basis points QoQ to 16.7% (our estimate: 16.4%) led by operating efficiencies part offset by visa cost. Management highlighted that Q1 performance is broadly inline but some of the spend freeze actions in BFS client continues to extend into Q2 and thus would mean LTIMindtree would miss the double digit growth in FY24. Given slip in Q1 growth and lower revenue conversion visibility outlook (our estimate: 8% CC in FY24), we believe the current valuations are bit stretched..What to expect next quarter We expect 2% QoQ growth in Q2 FY24 owing to ramp ups in deals of hi-tech vertical. Expect operating profit margin to expand by 6 bps QoQ (wage hikes not baked into estimates for Q2 – may impact OPM by another 150 bps in case it is effective entire Q2) offset by operating efficiencies. We believe ramp-up if deal wins to remain muted for another one-two quarters thus impacting overall FY24 growth..Valuation We believe that LTIMindtree’s financial performance got affected due to delays in ramp-ups and hiring freeze of BFSI clients, and expect it to deliver mid-single digit growth in FY24. However, as growth moderates, valuation may moderate further. We currently value LTIMindtree at 24 times on FY25E Earnings of Rs 163.7 with target price of Rs 4,380 per share (implies price/earnings-to-growth of two times; earlier 22 times and maintain 'Sell' rating on the stock..Click on the attachment to read the full report:.LTIMindtree Q1 Results Review - Deal Conversion To Be Lumpy: IDBI Capital.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

LTIMindtree Q1 Results Review - Revenue Miss; Low Visibility Leads To Weaker Outlook: Dolat Capital

Order inflow improves; but ramp-ups remain a challenge.

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