Pick of the Week : Buy LTIMindtree Ltd for the Target Rs. 6,250 - Axis Securities Ltd
Investment Rationale
A. Strong Deal Wins Provide Revenue Visibility
• LTIMindtree reported robust deal wins of $1.6 Bn in Q2FY26, up from $1.3 Bn in the prior year, reflecting sustained traction in large and transformation-led programs. The company’s focus on vendor consolidation and AI-driven transformation engagements strengthens its medium-term growth visibility. Management commentary on continued deal momentum into H2FY26 further underpins confidence in revenue acceleration ahead.
B.Cost Optimization & Execution Discipline Reflects Profitability Growth
• The company saw expansion of operating margins by 160 bps QoQ to 16% in Q2FY26, aided by cost optimization under the Fit4Future program, lower visa expenses, and currency benefits. The company’s ongoing initiatives to improve efficiency, coupled with further expansion, indicate a profitability trend in the coming quarters, in spite of scheduled wage hikes in H2FY26.
C. Strategic Investment to Leverage AI Capabilities
• The company’s strategic investments in becoming an AI-centric organisation through initiatives like Blueverse Studios in Mumbai and London, GenAI training for 80,000 employees, and multiple AI-led deal wins position LTIMindtree well to capture emerging demand in next-gen digital transformation. This focus enhances long-term differentiation and supports sustainable growth in an evolving technology landscape.
Outlook & Valuation
• LTIMindtree is well-placed to deliver and encourage growth, given its multiple long-term contracts with the world’s leading brands. We believe the company’s revenue and EBIT to grow at a CAGR of 9% and 13% over FY25-27E on the back of continued deal wins despite a stable macro-environment, driven by improved cross-sell, up-sell, mining of large clients across end-user industries and greater ability to bag larger deals.
• LTIMindtree is currently trading at 32x/29x P/E multiple for FY26E/FY27E.
Analyst Insights
• We recommend a BUY on the stock with a TP of Rs 6,250/share, implying an upside of ~10% from the CMP.
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SEBI Registration number is INZ000161633
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