LTI Mindtree’s stock experienced a 2% decline today after unveiling disappointing figures for the fourth quarter. The tech firm faced a tough fiscal year 2025, with growth tapering off in the latter half, mainly due to delays in deal execution and challenges specific to clients. In light of these results, leading brokerage firms have adjusted their price targets for the company’s shares, even while maintaining a ‘Buy’ rating. As the new management steps in, they have a clear agenda ahead.

Nuvama’s Take on LTIMindtree: Optimism for Q1 Margins

Nuvama Institutional Equities has reduced its target price for LTIMindtree by nearly 3% to ₹5,200, down from ₹5,350, following the company’s lackluster quarterly performance, particularly in terms of revenue. This adjustment reflects a cautious outlook on the tech firm’s immediate financial trajectory.

• Revised EPS Estimates: Earnings per share (EPS) projections have been cut by 3.3% for FY26 and 2.5% for FY27, as the anticipated growth and margin figures have been adjusted downwards.
• Initial Growth and Slowdown: The firm had a promising start to FY25, boasting strong revenue growth in the first half. However, factors like macroeconomic uncertainties and delays in deal execution hindered this momentum.

Nuvama noted, “With the headwinds related to transferring productivity benefits to our top client now resolved, we foresee no additional challenges impacting Q1.” The management team is optimistic about increasing margins in Q1, attributing this to upcoming efficiency initiatives. New CEO Venu Lambu has prioritized achieving industry-leading growth and margin improvements beginning in the first quarter of FY26.

Despite these adjustments, Nuvama believes LTIMindtree is well-positioned to deliver modest yet superior earnings growth compared to larger competitors, all while maintaining a competitive valuation. “We appreciate the company’s robust delivery capabilities and strong client relationships,” they concluded.

Motilal Oswal’s Insights: Adjustments Amidst Challenges

Similarly, Motilal Oswal has revised its target price for LTIMindtree while keeping a Buy rating intact. Highlighting the company’s strengths in data engineering and ERP modernization, the brokerage maintains that the current stock price presents an attractive investment opportunity.

• Revised FY27 EPS Estimate: The firm has lowered its EPS estimate for FY27 by 5% to reflect ongoing macroeconomic challenges, now valuing LTIMindtree at 26 times FY27 EPS, down from 30 times. This adjustment results in a new target price of ₹5,150, suggesting a 14% upside potential.

The firm’s "Fit for Future" initiative aims to enhance cost efficiency and profitability starting in Q1FY26. This initiative involves reassessing various costs, optimizing delivery and sales structures, and continuing efforts to correct the company’s operational pyramid. However, Motilal Oswal pointed out that the management has yet to provide specific timelines or tighter guidance, making the future margin expansion somewhat uncertain.

Summary of LTIMindtree Q4 Results

In its fourth quarter for FY25, LTIMindtree reported a 2.6% year-on-year increase in consolidated net profit, reaching ₹1,128.5 crore, up from ₹1,107 crore in the same quarter last year. Quarter-on-quarter, profit saw a 4% rise from ₹1,086.7 crore in Q3. The company’s revenue for this quarter was ₹9,771.7 crore, marking a 9.9% year-on-year growth and a 1.1% sequential increase. Additionally, the board has declared a final dividend of ₹45 per equity share for the financial year.

As LTIMindtree navigates these challenges and strives for growth, investors and analysts will be closely watching how the new management implements its strategies moving forward.