Whalesbook
Post-Results Sell-off
LTIMindtree's stock fell sharply Friday, shedding 5.2% to touch an intraday low of ₹4,285 per share. The decline occurred despite the company reporting a robust 23% year-on-year rise in net profit for the fourth quarter of fiscal year 2026, reaching ₹1,392.3 crore. Revenue also saw a healthy 15.5% year-on-year increase, totaling ₹11,291.7 crore. The board's recommendation of a ₹53 per equity share dividend did little to support the stock price in early trading.
Brokerage Outlooks
The market's negative reaction stemmed from mixed analyst sentiment following the earnings release. Nomura, while maintaining a 'Buy' rating, lowered its target price to ₹5,000 from ₹5,020, citing slightly reduced earnings per share (EPS) estimates. Motilal Oswal Financial Services also kept a 'Buy' rating but cut its target to ₹5,400 from ₹5,800, despite believing LTM's EPS growth outlook remains strong compared to peers. Conversely, JM Financial Institutional Securities downgraded the stock to 'Reduce' and slashed its target to ₹4,115 from ₹4,285, indicating that revenues and margins fell below their expectations.
Margin Pressures and Growth Prospects
Nomura highlighted that a 100 basis point quarter-on-quarter dip in EBIT margins during Q4 was largely due to salary hikes, a trend expected to continue into the first quarter of FY27. Despite this, the brokerage anticipates margins to improve to 15.7% in FY27, supported by better revenue growth and easing productivity headwinds. Management commentary suggested that the top BFSI account has bottomed out, and strong deal wins, a healthy exit growth rate, and a robust pipeline are expected to drive approximately 7.5% USD revenue growth in FY27.