LTIMindtree Share Price Target at Rs 6,200: Sharekhan Research
Mirae Asset Sharekhan has maintained a BUY recommendation on LTIMindtree Limited with a revised price target of Rs 6,200, reflecting robust confidence in the company’s near-term prospects. The report highlights significant order inflows, including a landmark $450 million, seven-year deal with a global agribusiness leader, which is expected to catalyze a turnaround in the consumer business segment. The “Fit for Future” program, focusing on cost optimization, workforce efficiency, and AI-driven productivity, is projected to drive margin improvements from Q1FY26. Despite lingering macroeconomic uncertainty, LTIMindtree’s strong deal pipeline and execution capabilities position it for industry-leading growth, with an anticipated sales and profit CAGR of 9% and 13%, respectively, over FY25–27E.
Mirae Asset Sharekhan’s Investment Thesis: Why LTIMindtree Is a Conviction BUY
Research House Call:
Mirae Asset Sharekhan has reiterated its BUY rating on LTIMindtree Ltd., setting a revised price target of Rs 6,200. This valuation is based on 31 times the projected FY27 earnings per share, with the current share price offering an attractive entry point for investors seeking exposure to a high-growth Indian IT services leader.
Order Inflows and Deal Momentum: A Game-Changer for Growth
Landmark Deal and Order Book Strength:
LTIMindtree is riding a wave of robust order inflows, underscored by a transformative $450 million, seven-year contract with a global agribusiness leader. This deal, the largest in the company’s history, is expected to push Q1FY26 order inflows above $1.5 billion—building on previous quarters’ strong performance of $1.68 billion in Q3FY25 and $1.6 billion in Q4FY25. The resultant revenue visibility is among the strongest in the sector, providing a solid foundation for sustained growth.
Consumer Business Turnaround:
The consumer business, which lagged in FY25 due to mixed performance in Retail/CPG and TTH segments, is poised for a material revival. The agribusiness deal, coupled with the absence of client-specific headwinds in the TTH portfolio, is expected to drive broad-based revenue growth and reduce reliance on any single vertical.
Margin Expansion on the Horizon
Cost Optimization and Productivity Gains:
LTIMindtree’s “Fit for Future” initiative is a multi-pronged strategy aimed at cost optimization, workforce efficiency, pyramid correction, and AI-driven productivity enhancements. Management expects visible margin improvements to commence from Q1FY26, with a medium-term goal of achieving an EBIT margin of 17–18%. The company’s focus on direct and indirect cost control, coupled with continued AI adoption, is anticipated to drive sustainable margin expansion.
Margin Trajectory and Industry Benchmarking:
For FY25, LTIMindtree reported an EBIT margin of 14.5%, down from 15.7% in FY24. However, the company’s disciplined approach to cost management and its strategic focus on digital transformation are expected to restore margins to industry-leading levels in the coming quarters.
Vertical Performance and Growth Prospects
Key Vertical Highlights:
Technology, Media & Communications: Contributed 24.5% to FY25 revenues, growing 8.7% year-on-year.
BFSI: The largest vertical at 36.1% of revenues, grew 4.6% driven by regulatory and data transformation deals.
Manufacturing & Resources: Grew 7.2% and contributed 19% to revenues.
Consumer Business: Remained flat in FY25 but is expected to rebound in FY26.
Health, Life Sciences & Public Services: Declined 3%, primarily in healthcare, but no major headwinds anticipated going forward.
Broader-Based Growth Ahead:
Management expects growth in FY26 to be more diversified, supported by strong traction in key verticals and the anticipated revival of the consumer segment. The company’s execution capabilities and domain expertise are seen as key differentiators in a competitive landscape.
Valuation and Investment Rationale
Attractive Valuation Metrics:
At the current market price (CMP) of Rs 5,410, LTIMindtree trades at 31.4 times FY26E EPS and 27.1 times FY27E EPS. The revised price target of Rs 6,200 is based on 31 times FY27E EPS, implying significant upside potential for investors.
Financial Performance and Projections:
| Particulars | FY24 | FY25 | FY26E | FY27E |
|---|---|---|---|---|
| Total Revenue (Rs cr) | 35,517 | 38,008 | 40,555 | 44,782 |
| EBITDA Margin (%) | 18.0 | 17.1 | 17.4 | 17.9 |
| Adjusted Net Profit (Rs cr) | 4,582 | 4,599 | 5,109 | 5,923 |
| EPS (Rs) | 154.4 | 155.0 | 172.2 | 199.6 |
| P/E Ratio (x) | 35.0 | 34.9 | 31.4 | 27.1 |
| P/BV Ratio (x) | 8.0 | 7.1 | 6.7 | 5.8 |
| EV/EBITDA (x) | 20.8 | 19.2 | 17.7 | 13.3 |
| ROE (%) | 25.0 | 21.5 | 21.9 | 23.0 |
| ROCE (%) | 27.8 | 23.7 | 23.7 | 24.5 |
Sales and Profit Outlook:
Mirae Asset Sharekhan projects a sales and profit CAGR of approximately 9% and 13%, respectively, over FY25–27E. This robust growth trajectory is underpinned by a strong deal pipeline, execution excellence, and margin recovery initiatives.
Risks to the Investment Thesis
Currency and Macroeconomic Headwinds:
The primary risks include rupee appreciation and adverse cross-currency movements, which could impact profitability. Additionally, macroeconomic headwinds, such as a potential recession in the U.S., may moderate the pace of technology spending and delay decision-making among clients.
Sector and Company-Specific Risks:
While LTIMindtree is well-positioned to navigate these challenges, investors should remain cognizant of the broader industry risks, including geopolitical volatility and discretionary spending delays.
Shareholding and Market Dynamics
Promoter and Institutional Holding:
Promoters hold a significant 68.6% stake, with foreign institutional investors (FIIs) and domestic institutional investors (DIIs) holding 7.0% and 15.5%, respectively. The remaining 8.9% is held by others, reflecting a stable and concentrated ownership structure.
Price Performance:
Over the past 12 months, LTIMindtree has delivered an absolute return of 9.4%, outperforming the Sensex by 2.7 percentage points. The stock’s 52-week range is Rs 6,765 to Rs 3,841, with a current market capitalization of Rs 1,60,290 crore.
Investment Levels and Price Target
Entry, Stop-Loss, and Target Levels:
Entry Level: Rs 5,400 (current market price offers an attractive entry point)
Stop-Loss Level: Rs 4,800 (to manage downside risk)
Target Price: Rs 6,200 (based on 31x FY27E EPS)
Investment Rationale:
Given the strong order book, margin improvement initiatives, and diversified growth outlook, LTIMindtree presents a compelling investment opportunity for investors seeking exposure to a high-quality Indian IT services leader.
Why LTIMindtree Stands Out
Differentiated Growth Strategy:
LTIMindtree’s focus on digital transformation, AI-driven productivity, and cost optimization sets it apart from peers. The company’s ability to secure large, multi-year deals and its disciplined approach to margin management position it for sustained outperformance in a challenging macroeconomic environment.
Final Recommendation:
Mirae Asset Sharekhan’s BUY recommendation is underpinned by LTIMindtree’s robust deal pipeline, margin expansion prospects, and attractive valuation. Investors are advised to consider the outlined entry, stop-loss, and target levels when building or adjusting their positions in this high-conviction stock.
