Jefferies cuts target price on LTIMindtree; shares in red

jefferies believes that LTIMindtree might be facing integration issues following its merger, as numerous senior-level executives make exits from the IT player.

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LTIMindtree shares fell in early trade on March 11 after international brokerage Jefferies cut its target price on the IT services player.

The brokerage cut LTIMindtree’s target price to Rs 5,890 per share, implying an upside of 15 percent from the previous session’s closing price of Rs 5,122.70 on the NSE.

Jefferies said the resignation of LTIMindtree‘s CFO Vinit Teredesai, along with other senior-level exits, suggest that the IT company might be facing integration issues from the merger.

The company announced his resignation on March 7, citing Teredesai’s desire to explore professional opportunities outside the L&T Group as the reason for his resignation.

The Board of Directors has appointed Vipul Chandra as the new CFO, effective April 25, 2024. Chandra is currently the Head of Treasury at Larsen & Toubro, the parent company.

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The brokerage added that it might take longer than expected for LTIMindtree to realise revenue synergies from the merger.

At 9.20 am, LTIMindtree shares were quoting Rs 5,100.6 on the NSE, lower by 0.4 percent.

Jefferies cut estimates by 5-9 percent to reflect revenue synergies and expects LTIMindtree to deliver around 15 percent EPS CAGR between FY24 to FY26.

The stock price has slipped 19 percent so far in 2024. The brokerage further noted that the risks are in the price, especially since the stock trades 28x, in line with its five-year average.

On March 5, CLSA reiterated its “sell” call on Wipro and LTIMindtree. The top-down approach to IT services sector demand outlook was reminiscent of 2019 and the 2024 guidance from global companies didn’t exude confidence, it said.

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