LTIMindtree share price drops 4% on soft Q1 results, but most brokerages remain optimistic; here's why

livemint.com:

BSE on Tuesday (July 18) a day after the company reported a weaker-than-expected April-June quarter (Q1FY24) results. The stock opened at ₹5,036.05 against its previous close of ₹5,133.95 and soon dropped 3.7 per cent to the level of ₹4,944.65. The IT player reported a net profit of ₹1,151 crore for Q1FY24 which was up 4 per cent year-on-year (YoY).

Its revenue from operations rose 14 per cent YoY to ₹8,702 crore. Read more: LTIMindree Q1 Results: Net profit rises 4% to ₹11,51 crore, revenue up 13%; key highlights here The softer Q1 numbers of LTIMindtree made several brokerage firms cut their target price on the stock as well as their PAT and EPS estimates. However, many of them still maintained their buy recommendation on the stock as they remain optimistic about the prospects of the merged entity of LTI and Mindtree.

Brokerage firm Nuvama Wealth Management maintained a buy call on the stock but cut the target price to ₹6,300 from ₹6,440 earlier. The brokerage firm also trimmed FY24 and FY25 EPS estimates by 2.8 per cent and 2.2 per cent, respectively, given lower growth. "Despite modest growth this quarter, LTIMindtree is well on track to report double-digit growth and strong margin expansion in FY24.

The strong deal flow momentum (by TCS, LTIMindtree, and Wipro) despite uncertainty in the decision-making process, reinforces our positive stance on the sector," said Nuvama. "We expect growth to bounce back in FY25 for the entire sector led by a sustainable strong demand. We retain LTIMindtree as a top pick, arguing the size and complementary business profiles of LTI and Mindtree will aid the merged entity to outperform peers over the next three–four years.