LTIMINDTREE Ltd Stock Research Report

Results Beat Expectations; Improved Outlook

Est. Vs. Actual for Q2FY25: Revenue – BEAT ; EBITDA Margin – BEAT ; PAT – BEAT

Change in Estimates post Q2FY25

FY25E/FY26E: Revenue 1%/1%; EBITDA Margins 1%/1%; PAT 1%/1%

Recommendation Rationale

• Long-term outlook positive: The long-term outlook for the verticals and client engagement remains resilient. The management is highly optimistic about long-term growth across various verticals, anticipating a broad-based expansion. However, prevailing macroeconomic challenges may temper growth momentum in the short term.
• Strong TCV in Q2FY25: The company’s TCV stood strong in Q2FY25 at $1.4 Bn across verticals and geographies.
• Improved long-term demand momentum: The management is confident in gaining medium to long term demand momentum based on the deals won in previous quarters. It expects a gradual pick-up in demand and encouraging revenue growth from Q2FY25 onwards. The management aims to achieve long-term margin levels of 17%-18%.

Sector Outlook: Neutral

Company Outlook & Guidance: The company expects the growth trajectory to rebound
after Q2FY25, backed by a healthy deal pipeline.

Current Valuation: 32x FY26E P/E, Earlier Valuation: 28x FY26E

Current TP: 6,720/share, Earlier TP: 5,895/share

Recommendation: Given the company’s strong growth potential, supported by robust deal
wins and superior execution capabilities, we recommend a HOLD rating on the stock.

LTIMINDTREE Ltd Stock Research Report

Financial Performance

In Q2FY25, LTIMindtree Ltd (LTIMINDTREE) reported revenue of Rs 9,433 Cr, marking an increase of 3.4% QoQ (2.3% QoQ in CC terms), which came in below our expectations. The company’s operating profit stood at Rs 1,458 Cr, posting robust growth of 6.4% QoQ. This improvement was driven by a better recovery in demand and strong volume growth. Furthermore, its net profit for Q2FY25 was Rs 1,252 Cr, reflecting a 10.3% QoQ increase.

Outlook

From a long-term perspective, we believe LTIMindtree is well-positioned to drive and sustain growth, supported by its multiple long-term contracts with leading global brands. The company’s strong revenue visibility provides confidence in its business outlook moving forward. However, rising concerns over the prospects of large economies, coupled with ongoing supply-side constraints, present uncertainties that may affect the company’s short-term growth trajectory.

Valuation & Recommendation

We recommend a HOLD rating on the stock, as LTIMindtree benefits from a strong deal pipeline. However, we are upgrading our P/E multiple due to the recovery in automation spending. We assign a 32x P/E multiple to its FY26E earnings of Rs 207/share, arriving at a target price of Rs 6,720/share, implying an upside of 5% from the current market price (CMP).

Key Financials (Consolidated)