LTIMindtree Shares Plunge 12% After Disappointing Q3FY24 Results and Bleak Outlook

Following Thursday’s release of Q3 earnings and a dismal prediction for the fourth quarter, shares of IT firm LTIMindtree fell about 12%. The stock dropped so precipitously that the market value of the company dropped by more than $1 billion.

Investors are worried about LTIMindtree’s growth prospects in the face of a difficult economic environment, as seen by the sharp decrease. Despite a 53.8% increase in net income, the IT giant fell short of projections across the board, including revenues, margins, and profits.

Concerns were already high when LTIMindtree added that “very challenging” business conditions and persistent client slowness could postpone margin improvement in the next quarter. This caused investors to panic and sell their shares, sending the price to its lowest point in eight months.

The total net profit for Q3FY24 at LTIMindtree was Rs 1,169 crore, an increase of 11.78% compared to the previous year. A pitiful 2.7% rise over the previous year brought in revenues of Rs 9,017 crore. The operating margin fell from 16% to 15.4% in the previous year. All important measures fell short of what analysts had predicted.

As clients maintained their budget cuts throughout the quarter in the face of economic concerns, weakening across key markets like the US and Europe was the main culprit. The company’s upper echelons hinted that Q4 will be just as tough due to customers cutting back on spending.

It is still a very difficult demand environment overall. “Our growth outlook for Q4FY24 and FY25 has been affected by the recent worsening of macroeconomic conditions,” commented LTIMindtree MD & CEO Debashis Chatterjee.

Global brokerages quickly lowered their earnings forecasts and price targets for the stock by as much as 6% following the lackluster performance, forecasting a lengthy halt in growth.

Nomura, a US-based financial advisory firm, lowered its target price for the stock from 4,820 to 4,610 rupees, while Citi decreased its price objective from 5,420 to 5,300 rupees.

With the merging of Mindtree with Larsen & Toubro Infotech last year, LTIMindtree was founded. The stock, which reached an all-time high of Rs 8,000 in September, has lost about 40% of its value due to the present market downturn.

With customers cutting back on technology spending, the firm is facing a difficult demand scenario, and Thursday’s slump left investors over Rs 20,000 crore worse off.

According to the third quarter report, Indian IT is still in for a rough ride. The industry has been riding high on pandemic tailwinds for a while, but now it’s facing headwinds like falling demand, margin constraints, and concerns about a recession in the US and Europe.

The markets will be watching the quarterly report cards of major IT companies closely over the next two weeks to see how they handle the difficult times as earnings growth plummets.