LTIMindtree Q4 Revenue Up 22%, But Flat Profit Splits Brokerages

LTIMindtree sees flat growth in the fourth quarter.

IT services company LTIMindtree reported a 22% year-on-year increase in revenue to Rs 8,691 crore in Q4FY23, compared to Rs 7,128 crore a year earlier and Rs 8,620 crore in the preceding quarter.

In dollar terms, the company’s revenue rose 12% yearly to $1.05 billion. Consolidated profit was flat at Rs 1,114 crore compared to the reported profit of Rs 1,108 crore in Q4FY22.

“We believe resale revenue is primarily driving revenue growth in the fourth quarter of fiscal 2023,” said IDBI Capital, which upgraded the stock to “buy” from “hold” with a target price of Rs 4,975 after the company reported its fourth-quarter results on April 28.

“In Q1FY24, we expect flat revenue growth due to delayed decision-making and a higher pass-through revenue base. Therefore, considering these challenges, we expect the company’s FY24 revenue to grow 9.2% YoY (lower than LTIM’s expected double-digit growth), it said.

Analysts at IDBI Capital expect the company to return to a strong growth trajectory (+15% YoY) in FY25 due to an increase in mega-deals, conversion of the deal pipeline into revenue, cross-sell and up-sell opportunities, and customer acquisition. They also expect margins to improve by 138 basis points in FY23-25, resulting in revenue and profit CAGR of 12% and 15%, respectively, in FY23-25.

HDFC Securities has also given a ‘buy’ call with a target price of Rs 5,090, arguing that the company has continuously outperformed its tier-one IT peers despite reporting weak revenue performance.

However, not everyone is so bullish, with Kotak Institutional Equities giving the stock a “reduce” rating with a price target of Rs 4,500. Fourth-quarter revenue fell short of expectations, while margins were in line with expectations, adding that the revenue hit was due to delays in increased deals and extended layoffs in the high-tech vertical. It believes management’s guidance appears aggressive and expects a slow start to FY24. The brokerage has slashed its FY25 EPS forecast by 0.9% due to demand headwinds and cut its FY24-25 revenue forecast by around 1%.

Domestic brokerage Motilal Oswal maintained its ‘neutral’ stance on the company with a target price of Rs 4,650.

Shares were trading 1.02% higher at Rs 4,364 on the NSE at 10:30 am, while industry benchmark Nifty IT was up 0.68% at 27,541.40.

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