Shares of LTIMindtree rallied 6% to scale a new 52-week high of Rs 5,458.45 in Thursday's (October 19) trade after the information technology (IT) services and consulting company posted a decent set of September quarter (Q2FY24) numbers.

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At $1,075.5 million, the top line grew 1.7% in constant currency (CC) quarter-on-quarter — in-line with analysts' estimate of 1.5%. Margins at 16%, -70 basis point quarter-on-quarter, were higher than estimates. The company's net profit at Rs 1,160 crore was in-line with estimates. The deal flow remained solid at Rs 130 crore, up over 20% YoY.

Analysts remain divided on the company's growth outlook for the remaining quarters of this fiscal. While Nuvama said that LTIMindtree may report mid-high single-digit growth and strong margin expansion in FY24, Nomura has a 'Reduce' call amid uncertain outlook.

"Buoyed by broadbased growth in Q2 and management guidance for stronger second half than the first half, LTIMindtree is likely to report mid-high single-digit growth and strong margin expansion in FY24, Nuvama said, adding that the long-term thesis of merger synergies remains intact.

"The strong deal flow momentum despite uncertainty in the decision-making process, broad based growth and margins surprise reinforces our positive stance on LTIMindtree," Nuvama said, retaining LTIMindtree as a top pick.

It argued the size and complementary business profiles of LTI and Mindtree shall aid the merged entity outperform peers over the next three–four years.

Nuvama has maintained a ‘Buy’ on the stock, with a target price of Rs 6,800, implying a potential upside of 30% from the current market levels, while Nomura has trimmed its target to Rs 4,510 per share.

The global brokerage said that high-single-digit growth is unlikely in FY24, given sluggish execution. Nuvama has lowered its FY24-26 earnings per share (EPS) by approximately 2-3%.

Motilal Oswal has reiterated its 'Neutral' rating on the stock. "LTIM, as a combined entity, has deep domain capabilities, strong partnerships with hyperscalers, and a robust sales engine, which will result in industryleading growth rates," it said.

According to analysts at Axis Securities, long-term outlook on the vertical and engagement with clients remain resilient. The management is very optimistic about long-term and broad-based growth across verticals. However, near term macroeconomic challenges may tamper growth momentum in the short term.

Given the company’s strong growth potential backed by robust deal wins and superior execution capabilities, the brokerage has recommended a 'Hold' rating on the stock with a target of Rs 5,230.

At 3:20 pm, the scrip was trading 6.24% higher at Rs 5,477 apiece on the NSE. Meanwhile, the stock is also the top Nifty gainer in today's trade.

First Published:Oct 19, 2023 4:06 PM IST