Shares of LTIMindtree fell sharply in Thursday's trade following its December quarter (Q3 FY24) results. The stock plunged 13.41 per cent to hit a day low price of Rs 5,436 over its previous close of Rs 6,277.65.
The company's consolidated net profit rose 16.8 per cent to Rs 1,169 crore. Revenue also rose 4.6 per cent to Rs 9,017 crore.
Operating margins expanded to 15.4 per cent year-on-year (YoY) but fell short of its expectations of exiting the fiscal-year at 17-18 per cent.
Margins, however, contracted sequentially by 60 basis points (bps), which the management attributed largely to furloughs and fewer working days during the quarter.
The company won't be able to achieve the aspirational margin band of 17-18 per cent for a few more quarters as it aims to make investments in the business, CEO Debashis Chatterjee said in a post-earnings call.
LTIMindtree's largest vertical -- Banking, Financial Services and Insurance (BFSI) -- recorded in 1.4 per cent drop. It said the drop in revenue growth in the BFSI division was due to higher-than-expected furloughs and the division has a cautionary approach towards new spends.
"Next major support zone visible is around Rs 5,400. On the higher side, the stock needs to decisively breach the Rs 5,840 zone to get some conviction and expect for a further rise," said Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher.
"LTI Mindtree looks bearish on daily charts with strong support at Rs 5,490. A daily close below this support could lead to target of Rs 5,135 in the near term. Strong resistance will be at Rs 5,790," said AR Ramachandran from Tips2trades.
The counter was trading lower than the 5-day, 10-, 20-, 30-, 50-day and 100-day simple moving averages (SMAs) but higher than the 150-day and 200-day SMAs. The 14-day relative strength index (RSI) came at 36.09. A level below 30 is defined as oversold while a value above 70 is considered overbought.
The company's stock has a price-to-equity (P/E) ratio of 43.07 against a price-to-book (P/B) value of 10.68.
Nuvama Institutional Equities said LTIMindtree delivered a weak third-quarter results. "Management commentary too did not exude much confidence as the company grapples with delayed decision-making and weak macros. We are cutting FY24E/25E/26E EPS sharply by 3.2 per cent/8.9 per cent/5.2 per cent. That said, we remain confident of the company's fundamentals and continue to value the stock at FY26E PE, yielding a target price of Rs 7,000; retain 'Buy'," the domestic brokerage stated.
(Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.)
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