LTI Mindtree Analyst Meet Key Takeaways: Showcases strong AI capabilities; Aspires for US$10 bn revenues by FY31/32

Overall: The company aims to reach a revenue target of US$ 10 bn over the next seven to eight years (FY31/32), implying a growth CAGR of low double digit This growth would entail a 2x growth in their BFSI and the Technology space which are its core areas (forming 60%+ of the revenues) and a 3x growth in rest of the verticals.

AI capabilities and Outlook: LTIM’s AI first approach is anchored out of its three core principles 1) AI in everything- wherein the company is trying to infuse AI in everything they do proactively. 2) Everything for AI: Creation of a support ecosystem, enabling their clients to scale up their AI innovation. 3) AI for everyone: Empowering people and creating AI personas for everyone. The company is seeing strong traction in Advisor led deals, reflecting into its current pipeline of 22 deals. Additionally, the company has currently trained and equipped 63% of its workforce with GenAI capabilities. It's AI platform is connected across 45 third party LLM’s and is receiving 10mn+ LLM requests per week.

Margin measures: On the margins front, the management reiterated its aspirations of achieving the margin band of 17-18% in the medium term (similar to the pre- merger margins of LTI and Mindtree), on the back of initiatives like Project North Star, which focuses on revenue maximization, cost efficiency, and productivity. Nonetheless, it also indicated that earlier aspiration of 200 bps margins expansion from merger levels, is not in sight in the medium term

Outlook: The company’s presence in discretionary spend linked portfolio along with pick up in the BFSI segment, positions it well for medium term growth. We believe company’s US$ revenue will grow at CAGR of 13.6% between FY24-27E, largely back ended. The long-term growth aspiration of low double-digit growth, however, is bit disappointing, while meaningful margins expansion, in near term, is also off the chart. We have a HOLD rating with a Target price of ₹ 6,050; valued at 26x P/E on FY27E EPS