Why CLSA rated LTIMindtree “Outperform” | Jobs Vox


LTIMindtree Ltd. will be India’s fastest growing IT company with a market cap of $10-50 billion on strong sales, according to CLSA.

The brokerage has initiated coverage on the IT company with an “outperform” rating and a price target of Rs 4,920 a piece, implying upside of 11%, as its earnings growth and yield ratios are high. Relatively lower institutional holdings are an additional support, CLSA said.

“We believe the scale of the merged entity elevates it into the $10-50 billion (Rs 82,476 crore to Rs 4.12 lakh crore) market cap group where investors should value it along with Wipro Ltd., HCL Technologies Ltd.” and Tech Mahindra Ltd.,” the brokerage said in its investor statement.

CLSA expects the combined Larsen & Toubro Group entity to deliver the biggest revenue growth, helped by increased participation in large deals. He predicted a CAGR of $13.5% for the company versus 9-11% for its peers.

CLSA also expects LTIMindtree to report better margins than its competitors, even without the potential leverage that would likely be reinvested to fuel revenue growth.

The balance sheet is healthy and working capital could become more efficient after the merger, CLSA said. “We like the structural story in LTIM, but full equity valuations and integration risks, in addition to sector concerns, could limit upside in the near term,” it said.


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