IT services company LTIMindtree reported a 22 percent on-year growth in revenue to Rs 8,691 crore for the fourth quarter of FY23, as against Rs 7,128 crore a year back, and Rs 8,620 crore in the last quarter.
In dollar terms, the company's revenue increased 12 percent on-year to $1.05 billion. Consolidated profit came in flat at Rs 1,114 crore, compared to Rs 1,108 crore reported in Q4FY22.
“We believe the Q4FY23 revenue growth was primarily driven by pass through revenues," IDBI capital said, upgrading the stock from ‘hold’ to ‘buy’ with a target price of Rs 4,975, after the company declared its fourth quarter results on April 28.
"In Q1FY24, we expect a flat revenue growth led by delay in decision making and higher base of pass through revenues. Hence considering these challenges we expect the company’s FY24 revenues to increase 9.2 percent YoY (lower than LTIM’s expectation of double digit growth),” it said.
Analysts at IDBI Capital expect the company to return to strong growth trajectory in FY25 (15 percent YoY) led by ramp up of large deals, conversion of deal pipeline to revenues, cross sell and up sell opportunities and client mining. They also expect 138 bps margin improvements over FY23-25, leading to a revenue and profit CAGR of 12 percent and 15 percent over FY23-25.
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HDFC securities also gave a ‘buy’ rating at a TP of Rs 5,090 and believes that while the company posted soft revenue performance, sequential performance was better than tier-1 IT peers. “We believe LTIM will continue its growth premium versus tier-1 IT peers and the company will grab market share from tier1 IT (5 percent of India tier-1 IT but 9 percent share of incremental growth).”
However, not everyone is as optimistic, Kotak Institutional equities has given the stock a ‘reduce’ rating at a TP of Rs 4,500. Q4 revenue missed expectations while margin was in-line, it said adding that revenues were impacted due to delay in ramp-up of deals and on extended furloughs in the hi-tech vertical. It believes management guidance appears aggressive and expects a slow start to FY24. The brokerage has cut its FY25 EPS estimate by 0.9 percent and revenue estimates by around 1 percent for FY24-25 on demand headwinds.
Domestic brokerage Motilal Oswal maintains its ‘neutral’ stance on the company with a TP of Rs 4,650. “While we see the strong order inflow of $2.6b over 2HFY23 (1.2x book to bill) as positive, our FY24 USD revenue growth estimate (9.5 percent YoY in CC) is lower than the company’s growth guidance on account of the weak start to FY24 and the uncertain macro environment," it said.
“We continue to believe that LTIM is well placed to gain from a healthy mix of cost-takeout deals and transformation spend and expect a strong recovery in FY25 despite the larger scale after the merger between LTI and Mindtree.”
At 10.30am, the scrip was trading 1.02 percent up on the NSE at Rs 4,364 with sectoral benchmark Nifty IT trading 0.68 percent higher at 27,541.40 points.
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