LTIMindtree (LTIM IN) – Q3FY26 Result Update – Top clients transition nears completion, growth uptick in sight – HOLD

The revenue growth (+2.4% QoQ CC) was above our estimates (2.0% QoQ CC), aided by ramp up of large deals and pass-throughs. Beyond selective pockets the growth was muted, especially BFSI and CMT verticals. The deal signing activities remain strong in these verticals, it will take few more quarters to achieve the normalized revenue run-rate for top marquee accounts. Although top 5/10 accounts de-grew 2.9%/1.1% TTM (vs decline of 5.2%/2.2% LQ), the pace of deceleration has reduced sequentially, implies recovery post productivity benefits. The management was confident of executing even better and aspired to achieve near to double-digit YoY growth in Q4. The company’s participation in vendor consolidation deals along with continued momentum in NN wins translate to a better growth visibility. The recent India-led NN deal (CBDT) would itself contribute ~80-90bps to the topline in FY27. On margins, it was able to sustain margins at a Q2 high base despite having pass-throughs, aided by internal margin program (fit-for-future) and INR depreciation supporting margins in Q3. We are keeping our margin estimates largely unchanged as the wage hike impact would keep margins under pressure. We are baking CC revenue growth of 5.4%/8.9%/9.5% YoY in FY26E/FY27E/FY28E, while keeping our margins at 15.3%/15.6%/15.9%. With that our EPS sees an upgrade of ~2% each in FY27E/FY28E. We assign 25x PE to FY28E EPS for a TP of 6,000, full valuations. Retain HOLD.