LTI Mindtree Ltd. demonstrated broad-based growth across sectors in its Q2 FY24, marking a recovery from three consecutive quarters of decline. This growth was observed despite the potential impact of Q3 furloughs and was accompanied by net additions to the company's employee base, indicating a strong H2 seasonality.
The company's operating performance remained robust amidst a wage hike, with a projected Ebitm exit of 17-18% to FY24E and a 200 basis points expansion. It should be noted that growth could be somewhat restricted by sub-par deal bookings and a high BFSI mix.
Despite these potential limitations, LTI Mindtree is expected to deliver superior earnings growth, with an 18% EPS CAGR over FY23-26E. This prediction is based on the company's premium growth compared to other large cap IT firms and converging margins.
In terms of valuation, LTI Mindtree remains an attractive large cap IT investment option based on its price/earnings to growth ratio.
HDFC Securities has maintained its 'Buy' rating on the stock and set a target price of Rs 5,890 (26 times September-25E EPS), reflecting its confidence in its future performance.
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