LTIMindtree Q1 Results Review - Strong Beat; Upgrade To Accumulate On Improved Commentary: Dolat Capital

Dolat Capital Report

LTIMindtree Ltd. reported constant currency revenue growth of 2.6% QoQ (our estimate: +1.9%), led by rampup in past deal wins. BFSI (+2.8% QoQ) and Tech (+8% QoQ) led the growth.

Operating profit margin at 15% up 30 basis points QoQ (our estimate: 15.2%).

Management highlighted that it is seeing acceleration in budget spending towards high-priority transformation programs from top clients and increased investments in AI across verticals which may lead to sustained growth momentum in Q2 and continue beyond.

We scale up our growth estimates and tweak our FY25/FY26E EPS estiamte (-2%/+2%) and expect 8.2% CC CAGR much better than ~5% for Top-five IT peers over FY24-FY26E, which would imply premium relative valuations.

Given improved outlook for BFSI we believe LTIMindtree would continue to deliver strongest growth in tier I pack for rest of the year, thus, we upgrade our rating from Sell to ‘Accumulate’ with target price of Rs 5900 at 30 times (earlier 24 times) FY26E, implies 2.5 times on PEG basis.

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