IT services company LTIMindtree faced a nearly 10% downturn in Thursday’s trade following lower-than-estimated earnings for the December quarter and downgrades from several top brokerages.

What Happened: On Wednesday, LTIMindtree reported a consolidated net profit that rose 17% year-on-year to ₹1,169 crore for the quarter ended December 2023, compared to ₹1,000 crore a year ago.

Revenue from operations increased by 5% to ₹9,017 crore, up from ₹8,620 crore earned last year.

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Analyst Viewpoint: CLSA downgraded the stock to “sell” from an earlier “outperform” rating and reduced the price target to ₹4,800 from ₹5,281. The Q3 results fell below Street estimates, with growth driven by seasonality, the brokerage said. It added that EBIT margin missed estimates due to furloughs.

Kotak reported a weak quarter with muted 0.7% quarter-on-quarter growth and EBIT margin decline of 60 basis points, both missing estimates. The brokerage recommended a “reduce” stance, cutting the target price to ₹5,500 from ₹5,910. Management indicated weak near-term growth and a delay in margin ambition due to demand challenges, the brokerage added.

Motilal described earnings as “disappointing” with a weak near-term outlook affecting FY25 growth. It reiterated a “neutral” rating with a target price of ₹6,600.

Nuvama cut the price target to ₹7,000 from ₹7,350, maintaining a “buy” stance. The management commentary did not exude much confidence as the company grapples with delayed decision-making and weak macros.

Price Action: LTI Mindtree’s share price plunged 10.21% to ₹5,635.10 in morning trade on Thursday.

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