Large Cap IT Stock Zoomed 281.62% In 5 Yrs, HDFC Securities Sees Upside, Buy For High Returns

Stock Performance Over The Past 5 Years

The stock on Friday last traded at Rs 4,268.05 apiece on NSE, up 0.69% as compared to its previous close. The stock hits a new 52 week low on 13 January 2023 at Rs 4,146.50 apiece. Whereas it recorded a 52-week high last month on 5 December 2022 at Rs 5,107.75 apiece. In terms of return on investment, the stock has continuously fallen over the past 1 year. It has fallen 2.16% in 1 month and 10.31% in 3 months, respectively. Whereas, it has fallen 35.4% in the past 1 year. However, it has given 125.12% robust return in 3 years and 281.62% return in 5 years, respectively.

HDFC Securities recommends buy the stock with Rs 4,920/share target price

LTIMindtree (LTIM) delivered its first quarterly performance as a combined entity clocking quarterly revenue of USD 1.05bn and recording deal bookings of USD 1.2bn. "We believe that LTIM can take market share from tier-1 IT (LTIM 5% of India tier-1 IT but 8-10% share of incremental growth). LTIM expects ~USD 1bn in revenue synergies over 4-5 years and ~200bps cost synergies. Our TP of INR 4,920 and rating of BUY is based on a 15% revenue CAGR and 17% earnings CAGR over FY22-25E and is supported by (1) an increase in deal pipeline and a greater proportion of large deals supported by strong client mining credentials (T10 accounts have grown at >4% CQGR and USD 10mn+ up >20% in last six quarters); (2) strong cross-sell and up-sell opportunity supported by vertical and service-line synergies with limited client overlap; and (3) operational synergies supported by access to wider talent pool (86k+ employees), SG&A optimisation and consolidation of delivery centres (India and Europe overlap)," the brokerage has said,

It added, "We also believe that risk mitigation will be work in progress as the attrition risk at the senior leadership level persists (recent exit being joint President Sales). While vertical-specific (hi-tech) challenges have increased, the supply side factors have become favourable since the announcement of the deal in May'22. The opportunities of transition from midtier IT to tier-1 are greater than the risks of this transition. We value LTIM at 25x Sep-24E EPS implying a PEG of <1.5x."

Disclaimer

The stock has been picked from the brokerage report of HDFC Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.