LTIMindtree’s stock fell 14% in early trading on January 18, the day after the business reported Q3 earnings that significantly below Wall Street expectations in every category. Furthermore, poor Management comments led brokerages to issue a cautious view, projecting further difficulties for the IT major in Q4.
Shares of LTIMindtree were trading on the NSE at Rs 5,569.20 at 9:44 a.m.As 9 lakh shares have exchanged hands thus far, volumes at the counter have also increased dramatically compared to the 4 lakh share average traded daily over the course of a month.

In Q3, the company’s revenue jumped 1.2 percent on-quarter to Rs 9,016 crore, while its Net Profit increased 0.6 percent sequentially to Rs 1,169 crore. Due to significant furloughs and limited discretionary spending, the operating margin also decreased in the third quarter, falling to 15.4% from 16% in the previous one.

The business’s revenue, operational margins, and net profit all fell short of industry projections.

Nevertheless, in Q3, the company recorded its highest-ever quarterly deal pipeline at $1.5 billion, even though it was dealing with more than anticipated furloughs and higher levels of seasonality.

In any case, the management issued a cautious statement, implying that the general unfavorable climate will persist into Q4.”We anticipate Q4 performance to remain similar to the current quarter against a continued backdrop of challenging macroeconomic environment and delays in client decision making,” LTIMindtree CEO Debashis Chatterjee said during the company’s earnings conference.

Brokerage company Nomura does not yet see any indications of a big resurgence in demand for LTIMindtree, based on the cautious commentary from management. The stock is subject to a’reduce’ call from the brokerage, with a price objective of Rs 4,600.

Due to hiring, the company has postponed its goal of achieving an operating margin of 17–18% by a few quarters.

Brokerages were not pleased with this as, according to HSBC, LTIMindtree’s worsening Q4 outlook and retreat on its margin ambitions point to medium-term portfolio challenges. The firm maintained its ‘hold’ rating on the company despite lowering its price objective to Rs 5,160 in order to account for slower growth and margins.

The brokerage Nuvama Institutional Equities kept its “buy” recommendation on LTIMindtree despite lowering its price target by 5% to Rs 7,000. The company perceives that LTIMindtree’s management remarks lacked confidence given the company’s struggles with poor macros and delayed decision-making. Because of this, Nuvama also drastically cut its expectations for the stock’s EPS in FY24, FY25, and FY26 by 3.2, 8.9, and 5.2 percent, respectively.

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