LTIMindtree reported a weaker performance when compared with Street expectations for first quarter of FY24. The constant currency revenue growth was meagre 0.1 percent quarter on quarter. Debashis Chatterjee, CEO & MD in an interaction with CNBC-TV18 said the macro environment is challenging and hence chances of clocking double digit growth in FY24 are slim.

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In the first quarter of FY24, the decision making process was slow and a freeze on hiring, especially in banking and financial services vertical impacted its performance. Chatterjee said "we are living through paradoxical times, where we have a strong deal activity, but a slow decision making process”. Many deals expected to close in 1QFY24, have spilled over into 2QFY24.

The earnings before interest and tax are lower at 16.7 percent when compared with 17.4 percent year on year. The weakness this quarter was well pronounced in the banking and financial services vertical, along with the retail segment which was impacted by inflationary pressures.

Furthermore, the hi-tech, media and entertainment vertical which saw a decline in past two quarters, saw an uptick in this quarter. “we see good deal activity here”.

LTIMindtree expects its exit margin run rate in FY24 at 17-18 percent and is confident that the second quarter will be better than the first quarter performance.

Citi has a sell rating on the stock owing to the incrementally cautious management commentary with Rs 4,160 as target price. The brokerage added, 'the management commentary suggested delays in ramp-ups, hiring freeze in BFSI clients impacting growth as well as changed nature of deals requiring transition; discretionary spend remains under pressure'. Nomura has cut the target price to Rs 3,940 and assigned a 'reduce' rating.

HDFC Securities expects the company to grow at a considerable growth premium to tier-1 IT and the company will take market share from tier-1 IT. Key positives that are expected to accelerate growth are book-to-bill of 1.3x in the last two quarters, which provide visibility along with 10 percent sequential growth in deal pipeline to supplement second half of FY24 acceleration. Furthermore, there is a strong renewal in large Hi-Tech account and growth in T5 accounts.

On July 17, LTIMindtree shares rose to 52-week high ahead of its June quarter earnings, but post its results declaration, the stock is down 2.4 percent on NSE at 1 pm on July 18 compared with Nifty IT trading 0.7 percent higher.