ICICI Securities has kept a 'Reduce' rating on LTIMindtree with a target price of Rs 3,720, citing concerns over the company's ability to hit its 6% organic growth target for FY27. While the firm is seeing growth in AI-related revenue, weakness in other business areas remains a hurdle for performance in the second half of the year.
Brokerage firm ICICI Securities has maintained its 'Reduce' rating on shares of LTIMindtree, holding the target price at Rs 3,720. The decision follows the company's latest financial results, where analysts identified a gap between the company's growth targets and its recent performance in non-AI business segments.
At the core of the brokerage's caution is the company’s stated goal of achieving approximately 6% year-over-year organic revenue growth for FY27. To reach this target, the company needs to show an average growth of about 3.2% every quarter throughout the second half of the fiscal year. Analysts view this as a difficult task, given that the segments of the business not focused on AI have recently seen a decline of 0.6% on a sequential basis.
While the brokerage is skeptical about the overall growth, it does acknowledge progress in certain areas. LTIMindtree is focusing on Artificial Intelligence as a growth driver, and this segment now contributes 13.4% to the total revenue. This portion of the business expanded by 12.7% quarter-over-quarter, showing that the company’s efforts to push AI services are gaining some traction with clients.
Despite the expansion in the AI portfolio and management’s optimism regarding a rebound in the third quarter, the brokerage remains concerned about the reliance on AI to compensate for slower demand elsewhere. The core issue for investors is the lack of momentum in the company's traditional IT service lines, which are facing pressure due to a broader slowdown in client spending on non-essential technology projects.
Looking ahead, the market will focus on whether LTIMindtree can prove that its non-AI segments can stabilize or return to growth. The key monitorable for shareholders will be the company’s actual revenue performance in the coming quarters and whether it can meet the 3.2% quarterly growth rate required to hit its annual target. The brokerage's forward-looking model for earnings estimates an EPS of INR 233 for the period covering Q3 FY28 to Q2 FY29, with a target multiple of 16x applied to reach the Rs 3,720 price point.