Partner With Us NRI
LTIMindtree Ltd>
  • CMP : 5,032.6 Chg : -14.65 (-0.29%)
  • Target : 5,320.0 (20.91%)
  • Target Period : 12-18 Month

28 Apr 2023

Aiming for double digit growth in FY24…

About The Stock

LTIMindtree (LTIM) is the merged entity formed after the merger of erstwhile Mindtree with LTI. It offers application development, IMS, digital solution services to BFSI, retail, health, media & hi-tech verticals.

  • LTIM has 700+ clients and combined annual revenue over US$4.1 bn+
  • LTIM has a combined employee strength of 84,000+ across 30+ countries
Q4FY23 Results:

LTIM reported margin recovery in Q4 results.

  • In CC terms, revenues grew 0.7% QoQ and 13.5% YoY
  • EBIT margins improved 250 bps QoQ to 16.4%
  • FY23 order book at US$4.87 bn
What should Investors do?

LTIM’s share price has grown by ~2.7x over the past five years (from ~₹ 1593 in April 2018 to ~₹ 4,400 levels in April 2023).

  • We maintain our BUY rating on the stock
Target Price and Valuation

We value LTIM at ₹ 5,320 i.e., 25x FY25E EPS

Key Triggers for future price performance
  • Merger expected to provide cross sell and up sell opportunities with scale benefits likely to kick in while participating in large deals hunt
  • Aiming for merger related benefit of US$1 bn in revenues and 200-300 bps margin expansion in the next four to five years
  • Vendor consolidation opportunity and digital acceleration. We expect LTIM to register revenue growth at 14.4% CAGR in FY23-25E
Alternate Stock Idea:

Apart from LTIM, in our coverage we like Infosys.

  • Key beneficiary of improved digital demand, industry leading revenue growth and healthy capital allocation prompt us to be positive


  • We have a BUY rating with a target price of ₹ 1,600

Key Financial Summary

Particulars FY20 FY21 FY22 FY23 5 year CAGR (FY18-23) FY24E FY25E 2 year CAGR (FY23-25E)
Net Sales 18,642.9 20,337.6 26,108.7 33,183.0 21.0 37,559.7 43,403.7 14.4
EBITDA 3,091.7 4,381.8 5,248.6 6,107.7 25.9 7,047.2 8,593.9 18.6
EBITDA Margins (%) 16.6 21.5 20.1 18.4 - 18.8 19.8 -
Net Profit 2,151.4 3,048.7 3,950.0 4,410.3 21.3 5,187.2 6,323.7 19.7
EPS (|) 72.6 102.9 133.4 148.8 - 175.0 213.4 -
P/E (x) 60.6 42.8 33.0 29.6 - 25.1 20.6 -
RoE (%) 25.1 26.2 27.6 26.6 - 27.0 28.3 -
RoCE (%) 27.3 31.7 32.1 32.4 - 32.5 34.2 -
Source: Company, ICICI Direct Research

Key takeaways of quarter and conference call highlights

  • The company reported constant currency growth of 0.7% QoQ while dollar revenue growth was 1% QoQ. LTIMindtree, in dollar terms, reported revenue of US$1,057.5 mn while in rupee terms revenue was at | 8,691 crore, up 0.8% QoQ
  • Vertical wise BFSI (38% of mix) grew 2.7% QoQ while retail & manufacturing reported growth of 2.4% & 1% QoQ, respectively. Hitech & Health declined for a second straight quarter reporting a decline of 1.5% & 2.2%, respectively


  • Geography wise North America (71.9% of mix) & RoW reported muted growth of 0.5% & 0.2% QoQ, respectively, while Europe reported sustained growth of 4.4%


  • EBIT margin of the company improved by ~250 bps QoQ to 16.4%. The company indicated the following tailwinds for margin improvement: a) ~80 bps reversal of furlough impact, b) 80 bps impact of lower merger integration cost and c) 90 bps impact of operational efficiency


  • For FY23, the company reported revenue of US$4,105.7 mn, up 17.2% (19.9% in CC terms) while in rupee terms the company reported revenue of | 33,183 crore, up 27.1%. LTIMindtree for FY23 reported an EBIT margin 16.2% compared to EBIT margin of 17.8% in FY22


  • The company indicated that integration of the two erstwhile companies i.e., LTI and Mindtree is now complete and it has started operating as a single entity from April 1,2023. LTIMindtree indicated that Q4 performance was impacted due to slower execution of deals due to delayed start to some of the programs, which it won recently. The company indicated that it is seeing a spill-over of the same in Q1FY24 and recovery is expected from Q2FY24 onwards. The company mentioned that it is guiding for double digit revenue growth in FY24 and the confidence of the same is coming from i) deal pipeline is healthy and the company is seeing no issue there, ii) order book continues to be healthy & order book is at US$4.87 bn, iii) the company also indicated that its large deal pipeline has increased to US$3.6 bn now compared to US$3.2 bn at the same time last year, iv) the integration is now complete and LTIM as an entity has now got a seat on a table for more large deals discussion, v) cross sell and upscale opportunities in their focus 100 clients, vi) range of industries they are catering to


  • The company indicated that its clients are now focusing on its costs. Hence, incremental pipeline is coming from cost take out deals and the trend is likely to continue till inflation pressure ease off. LTIMindtree also indicated that it is seeing strong opportunities in the BFSI space despite a couple of clients freezing some of the programs. The company also indicated that cost take out deals is generally slower in terms of ramp-ups as few things like vendor consolidation or client’s own restructuring often delays execution there. It mentioned that it is expecting recovery in BFSI space from Q2FY23 onwards. The company also indicated that there is some seasonality, which plays in Q1 in the form of absence of licenses revenues in the erstwhile LTI, which is also one of the reasons for weak Q1FY24 performance. The company mentioned that client’s investment interest continues in data & analytics, AI, EV, ADAS, industrial automation, sustainability and it is looking to capitalise on these opportunities and indicated that global banks and Insurance companies are already leveraging on data & analytics piece


  • In the BFS space, the company is seeing cost take out programs forming majority of the portion of a deal pipeline as banks are looking to conserve cash. In insurance space, transformation programs continue with continued investments in data & analytics. In Hi-tech some of the delayed decision making visible is product engineering, customer support however, the company mentioned that it has formidable position in this space due to vendor consolidation. In manufacturing, the company is seeing some vendor consolidation opportunities especially in some of its auto clients. In energy, stable commodity prices are helping growth. Also, there has been a continued investments in carbon footprint reduction and health & safety solutions. Retail has seen downward spending pattern due to higher interest rate and high inflation. The company’s growth in travel & hospitality continues to be healthy. It expects sustained momentum there, going forward as well


  • The company indicated that net decline in headcount addition for Q3 and Q4 should be seen in the context of merger wherein they were accessing headcount requirement from the merged entity perspective. Hence, a lot of fulfilments have been done from internal resources. The company indicated that from Q1FY24, they may go back to normal hiring cycle but indicated that hiring will be calibrated as per demand. LTIMindtree also indicated that subcontractor costs for it is already low compared to its peers but their bench strength will provide an opportunity to optimise it further. The company indicated that their aspirational EBIT margin band is 17-18%, which they will like to reach in the medium term. The company also indicated that in Q1FY24, it will have a slow start in margins and is likely pick up in the subsequent quarters. The company mentioned that wage hike will happen in Q2 and also mentioned that growth there would be lower than previous year


  • The company’s net employees during the quarter declined by 1,916 bringing the total number of employees to 84,546. LTM attrition of the company declined by 210 bps QoQ to 20.2%


  • The company during the quarter added 31 new clients. Also, on a QoQ basis it added two clients to US$50 mn+ and one client to US$20 mn+ revenue bucket list


  • The company declared a final dividend of | 40 per share taking its total dividend for FY23 at | 60 per share



I/We, Sameer Pardikar, MBA, Sujay Chavan, MMS, Research Analysts Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.         


Terms & conditions and other disclosures:


ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products.

ICICI Securities is Sebi registered stock broker, merchant banker, investment adviser, portfolio manager and Research Analyst. ICICI Securities is registered with Insurance Regulatory Development Authority of India Limited (IRDAI) as a composite corporate agent and with PFRDA as a Point of Presence. ICICI Securities Limited Research Analyst SEBI Registration Number – INH000000990. ICICI Securities Limited SEBI Registration is INZ000183631 for stock broker. Registered Office Address: ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025. CIN: L67120MH1995PLC086241, Tel: (91 22) 6807 7100. ICICI Securities is a subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.

Investments in securities market are subject to market risks. Read all the related documents carefully before investing.

Registration granted by Sebi and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. None of the research recommendations promise or guarantee any assured, minimum or risk-free return to the investors.

Name of the Compliance officer (Research Analyst): Mr. Anoop Goyal

Contact number: 022-40701000 E-mail Address: complianceofficer@icicisecurities.com

For any queries or grievances: Mr. Prabodh Avadhoot Email address: headservicequality@icicidirect.com Contact Number: 18601231122

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities and its analysts, persons reporting to analysts and their relatives are generally prohibited from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.


Recommendation in reports based on technical and derivative analysis centre on studying charts of a stocks price movement, outstanding positions, trading volume etc as opposed to focusing on a companys fundamentals and, as such, may not match with the recommendation in fundamental reports. Investors may visit icicidirect.com to view the Fundamental and Technical Research Reports.


Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.


ICICI Securities Limited has two independent equity research groups: Institutional Research and Retail Research. This report has been prepared by the Retail Research. The views and opinions expressed in this document may or may not match or may be contrary with the views, estimates, rating, and target price of the Institutional Research.


The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.


This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.


ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.


ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.


ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months.


ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.


Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.


ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report.


Since associates of ICICI Securities and ICICI Securities as a entity are engaged in various financial service businesses, they might have financial interests or actual/beneficial ownership of one percent or more or other material conflict of interest various companies including the subject company/companies mentioned in this report.


ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.


Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.


We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.


This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.



ICICI Direct endeavours to provide objective opinions and recommendations. ICICI Direct assigns ratings to its stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold, Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts valuation for a stock

Buy: >15%

Hold: -5% to 15%;

Reduce: -15% to -5%;

Sell: <-15% 

Pankaj Pandey

Head – Research




ICICI Direct Research Desk,

ICICI Securities Limited,

Third Floor, Brillanto House,

Road No 13, MIDC,

Andheri (East)

Mumbai – 400 093




Read More