LTM Stock Target Revised to Rs 4560 by Prabhudas Lilladher

Prabhudas Lilladher Trims Revenue Growth Estimates for LTM

Prabhudas Lilladher's research report on LTM highlights a revenue growth of +1.2% QoQ CC, which was in-line with the firm's estimates. Excluding the banking and financial services (BFS) vertical, growth was broad-based across multiple sectors. However, the BFS vertical experienced weakness due to productivity pass-back to one of its key clients. The management expects the productivity benefits to be largely concluded in Q4, but anticipates a slower recovery as the company progresses through fiscal year 2027 (FY27).

The company expects the timely ramp of earlier wins and recovery within the Hi-Tech client to support growth within the BFS and CMT verticals in FY27E. Additionally, the recent India-led NN deal (CBDT) is experiencing some deferrals due to hardware procurement activities, which may not contribute to FY27E revenue growth. The management also expects softness in a couple of quarters due to tight discretionary spends and escalating geo-political conflicts, although AI-related investments have an upward bias.

In terms of margins, the company exceeded Prabhudas Lilladher's estimates due to an internal margin program (fit-for-future) and INR depreciation in Q4.

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Trimmed Estimates

In response to the report, Prabhudas Lilladher is trimming its CC revenue growth estimates by 100bps each to 7.0%/8.0% YoY in FY27E/FY28E, while keeping its margins estimates largely unchanged. As a result, the firm's earnings per share (EPS) sees a downgrade of ~3-4% each in FY27E/FY28E. Prabhudas Lilladher assigns a PE ratio of 20x to FY28E EPS, resulting in a target price of 4,560. The firm has downgraded its recommendation to HOLD from BUY.