LTIMindtree Ltd (LTIM), whose shares have fallen 11 per cent year-to-date, climbed 3 per cent in Thursday's trade as a strong set of June quarter results led few brokerages revise their target prices upward on the counter on hopes the worst is behind for the IT firm. LTIM's Q1 beat was a result of macro demand bottoming out, faster ramp-up of deal wins, better client budgets and improvement in client’s willingness to spend.
Anlaysts said LTIMindtree's commentary was particularly encouraging among the companies that have reported so far. Clients are finally resuming the "high-priority transformation" projects, primarily focusing on areas such as data engineering, data estate and ERP modernisation, they noted.
The stock rose 3.25 per cent to hit a high of Rs 5,742.80 on BSE. LTIM shares fared poorly this year against 11 per cent rise in the BSE IT index.
Following its Q1 results, Motilal Oswal upgraded LTIMindtree to 'Buy' due to its superior offerings in data engineering and ERP modernisation that is positioning the IT firm well to capture the pre-GenAI expenditures. "We anticipate LTIM to outperform its large-cap peers and expect low double-digit CC growth for FY26," it said while suggesting a target of Rs 7,000 on the stock.
Nuvama introduced FY27 estimates and rolled forward its valuation multiple to 30 times September 2026 earnings per share. This brokerage maintained ‘BUY’ on LTIM with a revised target price of Rs 7,000 from Rs 6,650 earlier.
Post 1QFY25 performance and improvement in the management’s stance, Nirmal Bang has increased EPS estimates by 4.3-7.4 per cent for FY25-FY27. This is on the basis of expected revenue growth momentum in 2QFY25 and beyond, synergy realisation under an improved macro, benefits of vendor consolidation deals and margin improvement program, it said. The brokerage has upgraded the stock to ‘ACCUMULATE’ against 'Sell' earlier, with a revised target price of Rs 5,849.
LTIM noted that growth improvement in 1Q was led by the resumption of certain paused projects, particularly in the BFSI and Tech verticals, which are likely to continue in 2QFY25F as well. Many large clients have restarted their paused transformation projects and wins in certain vendor consolidation opportunities should drive a revival of demand in the near term, it said.
LTIM expects clients demand in FY25F to be led by cost-takeout and select high-priority transformation projects.
"We tweak FY25-26F EPS by -0.4 per cent to +0.6 per cent driven by higher revenue and our lower margin forecast. Raise target by 1 per cent to Rs 4,670 (from Rs 4,640, set at 24 times FY26F EPS). Upside risks: strong large-size deal wins and higher-than-expected margin expansion. We prefer Infosys and Wipro in the large-caps India IT services space," Nomura India said.