LTIMindtree shares surge over 3% despite 1% YoY decline in Q1 PAT. Here’s what analysts say

Shares of LTIMindtree on Thursday surged 3.5% on BSE to its day high of Rs 5,754 despite the company reporting a 1.5% year-on-year (YoY) rise in consolidated net profit at Rs 1,134 crore for the quarter ended June 30, 2024.

The revenue from operations for the reported quarter stood at Rs 9,143 crore, higher by 5% YoY over Rs 8,702 crore reported in the corresponding quarter of the last financial year.

Here is what analysts have to say about the Q1 results:

Jefferies: Underperform | Target price: Rs 4,920

Jefferies has an underperform rating on LTIMindtree and has hiked the target price to Rs 4,920 from Rs 3,960.

Q1 results were on the expected lines. Revenue growth revival across key verticals may be seen while the growth outlook seems to be improving. There are limited levers for margin expansion.

Investec: Sell | Target price: Rs 5,370

Investec has maintained a sell rating on the stock and hiked the target price to Rs 5,370 from Rs 4,640.

Investec states that LTIMindtree appeared to be the most bullish on demand relative to peers who have reported so far and they have increased their target P/E multiple to 25x vs 22x earlier considering a potential recovery. See own EBIT% getting cut from 15.9% to 15.4% after giving a reasonable benefit of doubt. Investec believes that revenue growth will have to be meaningfully better to make returns from hereon.

Nuvama: Buy| Target price: Rs 7,000

“LTIM has begun FY25 with a solid performance—after a disappointing FY24. Management commentary is upbeat, alluding to green shoots and ramp-up of deals—anticipating growth momentum to continue in Q2FY25. We largely maintain FY25E/26E EPS (marginal tweak ~2% on slightly lower other income),” said Nuvama in its report.

Nuvama has a buy call on LTIM with a target price of Rs 7,000.

Motilal Oswal: Buy| Target price: Rs 7,000

The domestic brokerage firm has upgraded the stock to a ‘buy’ and a target price of Rs 7,000 due to the company’s superior offerings in data engineering and ERP modernization, positioning it well to capture the pre-GenAI expenditures.

Further, clients are finally resuming the “high-priority transformation” projects, in these areas. Motilal Oswal anticipates LTIM to outperform its large-cap peers and expects low double-digit CC growth for FY26. Margins remain a concern and are the biggest risk to the domestic brokerage firm’s thesis. A re-rating still depends on significant margin recovery, driven primarily by volume recovery.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)