Axis Securities has reiterated a BUY rating on LTI Mindtree, raising its target price to Rs 4,960. The brokerage highlights strong client mining, particularly in the BFSI sector, and rapid adoption of AI-led services. Despite a slight dip in net income due to non-recurring items, the company reports steady revenue growth and expects accelerated performance in the second half of the fiscal year.
Axis Securities Reaffirms BUY Rating on LTI Mindtree
LTI Mindtree reported Q2 FY27 revenue of Rs 11,808 crore and a net income of Rs 1,398 crore.
Reader Takeaway: AI-led services are scaling rapidly, but traditional IT pricing remains under pressure amidst broader macroeconomic uncertainty.
What just happened
Axis Securities has maintained a BUY rating on LTI Mindtree, upgrading the target price to Rs 4,960. The brokerage cites the firm's successful client mining strategies and the growing contribution of AI-led services—which now represent 13.4% of total revenue—as primary drivers. Q2 revenue grew 13.6% YoY, though net income saw a marginal 0.2% YoY decline, attributed to the absence of one-time investment gains.
Why this matters
LTI Mindtree is navigating a transition where traditional IT services face pricing pressure, while specialized AI offerings yield higher margins. The company's ability to add a new major banking client in the US$100 million+ bracket signifies strong execution. Investors should note that the planned acquisition of Randstad’s digital assets remains on track for a Q3 closure, which is expected to bolster the company's footprint in Europe and Australia.
Risks to watch
Management highlighted that macroeconomic uncertainty in key global economies remains a concern. Additionally, rising subcontracting costs and currency volatility could compress operating margins. There is also a risk that rapid AI productivity gains may temporarily cannibalize revenue from legacy service lines before the company fully pivots to new models.
Context metrics
LTM reported EBIT margins of 15.6% for the quarter, an improvement of 7 bps QoQ. Order inflows for Q2 stood at US$1.3 billion, with a tactical shift toward shorter-duration, high-impact AI deals. Growth in constant currency terms reached 5.1% YoY, reflecting sustained demand despite a temporary slowdown in Saudi-related project activity.
What to track next
Investors should monitor the integration of the Randstad digital business and look for a recovery in BFSI and technology accounts. Management expects sequential growth to accelerate through the remainder of the fiscal year, targeting figures close to FY26 levels.