LTIMindtree’s share price was deep in the red following a downgrade in target prices by several brokerages due to its lukewarm performance in the quarter ended March.

What Happened: The IT firm’s net profit for January-March slipped 1.2% year-on-year to ₹1,099.9 crore, falling short of estimates. Meanwhile, revenue for the same period dipped 2.3% to ₹8,892 crore.

While maintaining their ratings, brokerages including Morgan Stanley, HSBC, Citi Research and JP Morgan trimmed their target prices for LTIMindtree.

Among them, Citi Research set the lowest revised target price at ₹4,165, down from ₹4,725. Conversely, HSBC retained the most optimistic target price at ₹5,380.

See Also: Tata Group Stock Falling After Q4, But Brokerages Raise Target Price

What Concerns Analysts: The brokerages raised concerns over the company’s margin performance, which showed no signs of recovery. The EBIT margin declined to 14.7% in the March quarter from 15.4% in the preceding one, missing the company’s target range of 17-18%.

Morgan Stanley noted that LTIMindtree’s margins could face more challenges than benefits. While both Morgan Stanley and Nomura expect growth to resume from the first quarter of FY25, their projections for FY25 growth differ.

Morgan Stanley is bullish on significant growth in FY25, while Nomura believes that growth acceleration is unlikely. However, HSBC highlighted that the company’s management expressed cautious optimism for FY25 growth.

Revised projections by Nomura indicate a decrease in FY24-26 EPS by about 4%-8% for LTIMindtree. JP Morgan revised the revenue target down by 1%-3% and margins by 30-40 basis points over FY25-26.

Citi Research pointed out that LTIMindtree’s valuations remain premium, making it one of the most expensive largecap IT stocks, alongside Tata Consultancy Services.

Price Action: LTI Mindtree’s share price was down 2.04% at ₹4,630.20 in morning trade on Thursday.

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