LTIMindtree among top three Nifty 50 losers after Q4 results miss estimates

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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LTIMindtree shares were in focus on April 25, a day after the IT services firm posted its quarterly earnings that did not meet CNBC-TV18 poll projections across parameters. The stock was among the top three Nifty 50 laggards in early trade.

Following a quarter-on-quarter decline in revenue, profit, margin as well as EBITDA (earnings before interest, taxes, depreciation, and amortisation), at least two global brokerages have cut their target prices on the IT stock.

Morgan Stanley cut the target price on LTIMindtree shares to ₹4,600, implying an almost 3% downside from the closing price of April 24. The brokerage, with an equal-weight stance, believes the IT services’ margin may have to face more headwinds than tailwinds. It asserted that to ensure a material uptick in growth for the company in FY25 compared to FY24 will require superior execution.

It, however, said that continued strong net income conversion to free cash flow (FCF) is positive and that there is an expectation of growth returning from the first quarter of FY25.

Nomura, meanwhile has a ‘reduce’ rating on the stock with a target price of ₹4,170, which implies a potential downside of 11% from the previous close.

According to the brokerage, no meaningful recovery is in sight for LTIMindtree. There shall be sequential growth from Q1FY25, however, growth acceleration is unlikely in FY25.

It pointed out that the firm’s margin disappointed again in Q4, the third quarter in a row.  It also lowered the FY24-26 earning per share (EPS) estimate by nearly 4-8%.

Also Read: LTIMindtree declares 4500% final dividend

HSBC, meanwhile, with a hold call has cut the target on the stock to ₹5,380. Despite the cut, this still means a potential upside of almost 14%. The brokerage noted that the company’s management was slightly more positive on FY25 growth but stayed negative on the margin outlook.

LTIMindtree shares traded almost 2% lower at ₹4,640.15 on NSE at 9:32 am. So far in 2024 (year-to-date), the stock has erased a quarter of investors’ wealth. It has declined more than 25% YTD as against the benchmark Nifty 50 which has risen 3% during the period.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow