Geojit Investments Ltd has reiterated a HOLD recommendation on LTIMindtree Ltd, revising its 12-month target price to Rs. 6,217, implying a potential upside of approximately 10% from the current market price of Rs. 5,626. The brokerage’s stance reflects a nuanced view: while the company continues to demonstrate robust revenue traction driven by digital transformation and AI-led engagements, near-term risks—particularly from the rapid evolution of agentic AI tools and one-off cost impacts—temper aggressive optimism. Margin resilience, strong deal wins, and offshore leverage support medium-term earnings growth, but topline sensitivity to client tech spending warrants caution.

Digital Deal Momentum Anchors Q3FY26 Performance

Revenue growth accelerates across verticals: In Q3FY26, LTIMindtree reported consolidated revenue of Rs. 10,781 crore, up 11.6% year-on-year. Sequentially, revenue expanded 3.7%, underscoring steady execution across key industry segments.

Retail and travel, transportation and hospitality emerged as standout performers, posting 21% YoY growth. Manufacturing and resources followed with 20.3% expansion, while health, life sciences and public services grew 14.9%. BFSI—the company’s largest vertical—advanced 7.2%, and high-tech recorded 4.7% growth.

This broad-based traction reflects LTIMindtree’s strengthening position in large digital transformation mandates, particularly in cloud modernization and AI integration initiatives.

Margins Expand Despite Macro Undercurrents

Operating leverage drives profitability gains: EBITDA rose 25.7% YoY to Rs. 2,003 crore, with margins expanding 210 basis points to 18.6%. The margin improvement was supported by:

Higher offshore utilization (85.5% vs. 84.6% last year)

Improved operating efficiencies

Favorable currency movements

The strategic tilt toward offshore delivery—14.5% onsite mix versus 15.4% in Q3FY25—enhanced scalability and cost discipline.

However, reported PAT declined 11.7% YoY to Rs. 960 crore due to a one-time labour code expense of Rs. 590 crore. Excluding this exceptional item, adjusted PAT stood at Rs. 1,401 crore, up 29.1% YoY. Adjusted EPS rose to Rs. 47.3 for the quarter.

The divergence between reported and adjusted earnings underscores that core operating performance remains intact.

Order Wins and Strategic Positioning

Multi-year contracts reinforce visibility: During the quarter, LTIMindtree secured large engagements with:

A leading US insurance company

A global financial institution

A global technology company

A UK-based food and beverage enterprise

These contracts focus on AI, cybersecurity, infrastructure modernization and cloud transformation.

The company also launched agentic AI solutions for the software development lifecycle and introduced an industry-specific offering on the AWS Agentic Marketplace tailored for the travel and hospitality vertical. Additionally, its “Edge” platform aims to streamline digital transformation and standardize edge computing environments.

While these initiatives reinforce innovation credentials, Geojit cautions that the rapid emergence of agentic AI could disrupt traditional volume-based IT services—posing potential topline risks if deal pipelines soften.

Financial Projections: Earnings Visibility Through FY28E

Below is a snapshot of key forward estimates:

Revenue is projected to grow at a CAGR of roughly 11–12% through FY28E. EBITDA margins are expected to expand gradually to 18.7%, supported by scale efficiencies and offshore optimization.

Adjusted EPS is forecast to rise from Rs. 182.6 in FY26E to Rs. 239.1 by FY28E, translating into a healthy mid-teens earnings CAGR.

Balance Sheet Strength and Capital Efficiency

Lean leverage, improving returns: LTIMindtree maintains a conservative capital structure, with adjusted debt-to-equity at 0.1x across forecast years. ROE is expected to improve from 18.9% in FY26E to above 21% in FY27E and FY28E.

Liquidity metrics remain comfortable, with current ratio projected to rise to 4.6x by FY28E. Interest coverage exceeds 20x, indicating minimal financial stress.

The company continues to reward shareholders via dividends, with DPS expected to increase to Rs. 102.8 by FY28E.

Valuation Framework and Target Price Rationale

Geojit values LTIMindtree at 26x FY28E adjusted EPS, arriving at a target price of Rs. 6,217. At CMP of Rs. 5,626, the implied upside is approximately 10%.

On forward multiples:

FY27E P/E: 26.6x

FY28E P/E: 23.2x

FY28E EV/EBITDA: 17.0x

While valuations are not inexpensive relative to historical IT averages, they are justified by:

Strong deal pipeline

Margin expansion trajectory

Digital and AI positioning

Stable balance sheet

That said, the stock has underperformed the Sensex over one year, delivering -6.5% absolute return versus benchmark gains of 7.1%.

Key Risks to Monitor

1. AI-led automation risk: Rapid adoption of agentic AI could compress traditional IT service volumes.
2. Deal flow sensitivity: Any slowdown in discretionary tech spending may pressure revenue growth.
3. Currency volatility: Management is revisiting long-dated hedges amid exchange rate fluctuations.

Monitoring quarterly contract wins and total contract value trends will remain critical indicators of sustained momentum.

Investment View: Stability Over Aggression

LTIMindtree stands at an inflection point where digital transformation tailwinds intersect with structural AI disruption. The company’s ability to pivot toward higher-value, AI-enabled offerings will determine whether margin expansion can offset automation risks.

With earnings visibility improving through FY28E, disciplined capital management and stable operating leverage, the stock merits retention—but not aggressive accumulation at current valuations.

Geojit’s HOLD recommendation reflects a balanced stance: steady digital momentum, yet tempered by evolving industry dynamics. Investors may consider fresh exposure only on meaningful corrections closer to the Rs. 5,200–5,300 range, while existing holders can stay invested with a 12-month target of Rs. 6,217.

Disclaimer: Investment in securities markets is subject to market risks. Investors are advised to conduct their own due diligence and consult certified financial advisors before taking any investment decisions.