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IDBI Capital Report
LTIMindtree Ltd. reported subdued Q3 FY24 numbers. The company expects Q4 growth to be similar to Q3 due to furloughs, delay in decision making and cautionary macro.
We expect LTIMindtree to register 11.7% YoY and 15.2% YoY revenue growth for FY25E and FY26E led by improvement in discretionary spend, reinvestment to drive growth and ramp up large deal won.
However, we expect margins to be impacted in the near term due to re-investment in business and transition cost of large deals.
Hence, we now expect the company to reach aspirational 18% margin in FY26E versus earlier expectation of FY25E.
Consequently, we have revised our FY25E EPS estimates downwards by 5%.
This coupled with recent run up in price; we downgrade the stock from 'Hold' to 'Sell' with a revised target price of Rs 5,660 (26 times FY26E earnings per share, introduced FY26 estimates, earlier target price Rs 4,910).
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