HOLD
CMP: Rs4572
Target Price: Rs4850
* At its analyst meet, LTIMindtree (LTIM) unveiled its 'LTIM One' strategy aimed at enabling it to realize full potential of the merger by driving a unified culture, GTM, and capability & experience across the organization, and delivering sustainable profitable growth.
* The company targets achieving USD1bn revenue synergies and delivering industry-leading, consistent profitable growth by leveraging the expanded growth opportunities presented by its diversified vertical, cross-sell/upsell opportunities, partnership-led sales engine, LTIM One strategy and best-in class IP portfolio.
* The company expects Q4FY23 EBITM to expand by ~200bps QoQ, on the back of reduced impact of merger-related costs and furloughs. It plans to quickly retrace the normalized EBITM range of 17-18% and further scale it up by 200bps by FY27, via delivering cost synergies, SG&A leverage and operational efficiency.
* We remain positive on the medium-to-long term growth prospects of LTIM, but current valuations offer a limited upside and near-term growth moderation, due to softness in High-tech & Retail as well as macro uncertainties. We roll forward our TP to Mar-25E EPS and maintain HOLD with a TP of Rs4,850/share (earlier Rs4,600) at 23x its Mar-25E EPS.
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