6000% Dividend Paid In FY23: Brokerage Upgrades Rating On This Dividend King Stock, Expects 15% Rise Ahead

Dividend king stock: IT stock LTIMindtree, not only replaced the former-largest NBFC stock HDFC in July on Nifty 50, but it turned ex-dividend recently as well for a dividend payout of 4000% to its shareholders. But that's not the only reward, LTIMindtree has already paid a 2000% interim dividend to its investors in the fiscal year 2022-23. Accordingly, the company's dividend payout for FY23 comes to a breathtaking 6000%. That being said, among high dividend-paying stocks, LTIMindtree has a potential upside of 15% as brokerage Geojit has raised its target on this large-cap stock to 'Buy' from 'Hold'.

LTIMindtree showed gained traction on Monday, as it traded at Rs 4939.95 apiece up by Rs 17.20 or 0.35% on BSE, at the time of writing.

LTIMindtree stock price tumbled by at least 4% on BSE last week after its Q1FY24 earnings report where the company saw a lacklustre performance with subdued growth across key metrics. That led LTIMindtree to break its psychological mark of Rs 5,000.

Last week, on Friday, LTIMindtree stock stood at Rs 4922.75 apiece.

Nevertheless, LTIMindtree's year-to-date performance stays on a positive note with nearly 14% upside on BSE.

In Q1 of FY24, LTIMindtree recorded 0.1% sequential and 13.8% YoY growth in revenue to Rs 8,702.1 crore, while PAT edged higher to Rs 1,152.3 crore rising by 3.4% QoQ and 4.1% YoY. Meanwhile, EBITDA stood at Rs 1,635.5 crore, up by 2% QoQ and 9.5% YoY.

Post the Q1 results, brokerage house Geojit said, "In Q1FY24, LTIMindtree reported flat revenue growth, owing to subdued performance across all segments." However, it also added that EBITDA margin expanded 30bps QoQ to 18.8%, aided by the
reclassification of the workforce, leading to a rise in utilisation, gross margin, cost reduction and operational efficiency.

Among the positives were that LTIMindtree's order inflow improved further to $1.41 billion in Q1FY24 from $1.35 billion in Q4FY23. Also, the company added 19 new clients in Q1FY24, with 723 active clients.

Geojit's note cited that LTIMindtree's management anticipates EBIT margin to be 17% to 18% for FY24E, despite wage hikes in July 2023.

Following the above, the brokerage said, "The company has witnessed a healthy order across key verticals and industry markets, leading to a robust deal pipeline, and is strategically placed to take advantage of the clients' growing digitalisation requirements. With a strong order book and a focus on creating value propositions for cross-selling and upselling existing clients, we expect revenue to grow strongly in the coming quarters."

However, the brokerage believes that delays in clients' decisionmaking, slow ramp-ups, and a hiring freeze are a source of concern.

Even so, Geojit said, "We remain positive on the stock and upgrade our rating to BUY from HOLD with a revised target price of Rs 5,665 based on 28x FY25E adjusted EPS."

With that, LTIMindtree has a potential upside of 15% ahead on exchanges.

Dividends are like an incentive that a company offers to its investors from their net profits for a respective financial year. Although, LTIMindtree did not announce any dividend during the Q1 of FY24. However, it will be keenly watched if they are stored in the upcoming quarters.

At the current market price, LTIMindtree has a dividend yield of 1.22%. In FY23, the company's dividend payout is at 6,000% aggregating to Rs 60 per share --- higher than the payout of 5,500% to Rs 55 per share in FY22.

LTIMindtree has consistently declared dividends for the last five years, emerging among high dividend-paying stocks.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns. in advises users to consult with certified experts before making any investment decision.