LTIMindtree - On A Strong Footing With Both Revenue, Cost Synergies In Place: ICICI Securities

ICICI Securities Report

We attended LTIMindtree Ltd.'s Investor Day 2023 (on March 14), wherein the management reiterated its aspiration to achieve $1 billion incremental revenue through cross-sell synergies over the next two-four years and reach 19-20% Ebit margins by FY27 i.e. improvement of ~200 basis points on pro-forma margins of the combined entity as on FY22.

Mindtree Ltd. is stronger in front-end digital solutions and Larsen and Toubro Infotech Ltd. is stronger in back-end enterprise resource planning related core transformation solutions. Given the complimentary service line expertise of L&T Infotech and Mindtree, LTIMindree aims to derive revenue synergies through cross-sell/up-sell opportunities across the existing 374 client accounts of more than $1 million in revenue size.

For the same, it is investing in strengthening service line sales leadership and capabilities. Management mentioned demand for technology transformation is secular; however, in the near term, due to macro uncertainty it is seeing longer decision-making cycles in terms of conversion of pipeline to total contract value and execution of TCV to revenue largely in discretionary spends.

Pipeline is healthy with 68 large deals (more than $ 20 million deals) amounting to TCV of $3.2 billion. It is characterised by higher share of cost optimisation deals compared to last year.

LTIMindree’s exposure to Silicon Valley Bank is not material and the recent fallout of the bank does not have any material impact on it, as per the management.

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