Macquarie Cuts Targets for LTI Mindtree

Global Brokerage, Macquaire has given a rating of outperform to the 5th Largest IT company of India, LTI Mindtree but has reduced its target price from Rs.7050 to Rs.6250, Despite this cut, the revised targets suggest a potential upside of 34% from the April 16 closing price.

Why This Cut from Macquarie?

Macquarie noted that while LTIMindtree’s merger synergies have hit a rough patch, top clients are performing well, but 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. The global investment bank has retained its outperforming rating on LTI Mindtree due to the strong fundamentals of the company. But has slashed the target price from Rs.7050 to Rs.6250.

Other Problems for LTIMindtree

Since the merger of Larsen & Toubro Infotech and Mindtree was announced in May 2022, which became operational in November of that year, there have been several high-profile exits from the merged entity.

Between October 2023 and December 2023, the firm has seen key officials including BFSI head Mukund Rao, health and life sciences head Ashish Deshpande, America region head Raj Pandya, chief marketing officer Paresh Vankar, and retail and CPG head Dinesh Bajaj leave.

Other Brokerages on LTIMindtree:

JPMorgan has recently become more optimistic about certain information technology stocks, upgrading LTIMindtreeto ‘neutral’ from ‘underweight’ on April 4, with target prices set at ₹5,200 

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.

Stock Movement:

Over the past six months, LTIMindtree’s shares have declined by 8.5%, contrasting with a 13.33% rise in the Nifty 50 index during the same period. The IT Giant is expected to announce Q4 earnings next week on April 25.

Conclusion:

The price cut from Macquarie comes because of the rough patch of merger synergies and weak demand from clients(except the top one). Though the revised target price after the cut still indicates an upside of around 34% from the current market price as the company holds strong fundamentals and value among several IT companies in the market, The stock currently trades at Rs.4740 a piece, +1.50% as of 18th April.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.