Global Brokerage Sees 34% Upside In This IT Services Giant Despite Trimming Target Price

Macquarie has reduced its target price for IT services company LTIMindtree from ₹7,050 to ₹6,250 per share, citing difficulties in achieving merger synergies. Despite this cut, the revised target suggests a potential 34% upside from the April 16 closing price. Macquarie still rates LTIMindtree as ‘outperform’ due to its fundamental strengths.

What Happened: This revision follows the immediate resignations of Pankaj Chugh and Gregory Dietrich, executive vice presidents of global sales.

Macquarie noted that while LTIMindtree’s top clients are performing well, the company has struggled with client mining beyond these major accounts. The brokerage anticipates that cross-selling synergies will only improve after a significant recovery in demand.

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Meanwhile, JPMorgan has recently become more optimistic about certain information technology stocks, upgrading LTIMindtree and KPIT Tech to ‘neutral’ from ‘underweight’ on April 4, with target prices set at ₹5,200 and ₹1,400, respectively. JPMorgan observes that the demand environment has been flat since the latter half of CY23, with no expected improvement in Q4FY24 or Q1FY25.

In a related development, Jefferies lowered its target price for LTIMindtree to ₹5,890 on March 11, attributing this decision to the CFO Vinit Teredesai’s resignation and other senior-level departures, indicating possible integration challenges post-merger.

Over the past six months, LTIMindtree’s shares have declined by 9.4%, contrasting with a 13% rise in the Nifty 50 index during the same period. The IT giant is expected to announce Q4 earnings next week on April 25.

Price Action: LTI Mindtree Ltd. shares were up 0.88% at ₹4704.30 on Thursday morning.

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