In the brokerages’ earlier note, Motilal Oswal have pitched LTIMindtree as its top pick for 2025. Even in bear case scenario, LTIMindtree could offer superior or at-par earnings growth versus key large-cap IT names.
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Motilal Oswal Report
LTIMindtree Ltd. stock has corrected by 22% in the past three months, despite multiple positive developments: US BFS growth recovery, positive QoQ growth trajectory in 9M FY25, and the most important being the appointment of a new CEO, Mr. Venu Lambu.
Key reasons for this underperformance include the slower-than expected discretionary pickup, revenue decline in Microsoft, and uncertainty over margins. The stock now trades at 22x FY27e EPS, versus 22/22/21x for Infosys/TCS/HCLTech. We find these valuations as an attractive risk-reward opportunity and like the stock at current levels.
In our earlier note, we have pitched LTIMindtree as our top pick for 2025. Even in our bear case scenario, LTIMindtree could offer superior or at-par earnings growth vs key large-cap IT names.
Our base case scenario now assumes revenue growth of c9% for FY26e and c11.5% for FY27e, but we pare our margin expansion assumptions further to account for more aggressive selling, general and administrative investments.
We concede that near-term catalysts—weakness in hi-tech in Q4 and management’s time to settle in—preclude an immediate recovery in price, but we reiterate Buy on strong fundamentals and keep our focus on the turnaround.
We also cut our target multiple by 10%, in line with our other stocks, to account for lower risk appetite in the current market. Reiterate Buy with a target price of 6,600.
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