LTIMindtree shares: Kotak Equities cuts target price, says correction required to price in integration, demand risks

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LTI Mindtree in the past 12-15 months, which it believes is driven by an accommodative stance during the merger process. “We would have liked quick changes, restricting the pain to 1-2 quarters. However, management’s accommodative stance to reduce risks has paradoxically turned into a riskier policy, leading to frequent senior management exits and associated instability.

These likely impacted focus on driving revenue growth and realization of merger synergies," Kotak Equities said. Also Read: Vinit Teredesai resigns as LTIMindtree CFO, Vipul Chandra to take over However, it believes LITMindtree’s management team is still robust, with plenty of reputed senior persons, with large experience in scaling business units in Tier 1 organizations. The brokerage noted that the weak spending environment adds to near-term risks and thus, cut its growth estimates for the IT major.

It cut revenue growth estimates for FY25 and FY26 to 7.2% and 11.9% from 9.8% and 13.2%, respectively. It also cut the FY26 EBIT margin by 30 bps to 16.9%. “Apart from lower stability in the senior management team, the near-term outlook is clouded by a few factors — weak discretionary spending in CY2024E; a few key clients undergoing restructuring programs, with a focus on cost savings, which can disrupt the normal flow of projects and slower realization of benefits from cost take-outs due to longer sales cycles, slower ramp ups and other factors," said the brokerage.