LTI Mindtree: Good interim dividends
Sharekhan has placed a buy call on the stock of LTI Mindtree with a target price of Rs 4965. LTM attrition reduced to 22.3% in Q3FY23 versus 24.1% in Q2FY23.The company announced an interim dividend of Rs 20 per equity share of Rs 1 each. Management expects synergy benefits of $1-bn and margin expansion of 200 to 300 bps over the next four to five years.
Buy LTI Mindtree for a target price of Rs 4965, says Sharekhan
“Management stated that the merged entity is well placed to provide digital transformation to clients. We expect the outlook for FY24 to be uncertain on account of global headwinds and any recovery is most likely to be gradual. Post-merger, LTIMindtree is well-placed to provide cross-selling and up-selling opportunities and reap significant revenue and cost synergies over the longer term. Hence we maintain Buy rating on LTIMindtree with a revised price target of Rs. 4965 despite the muted results in a seasonally weak quarter,” the brokerage has said.
Hold Atul stock, says Sharekhan
On Atul Sharekhan has maintained a with a revised price target of Rs. 7,700, given near-term earnings headwinds due to global economic slowdown and valuation of 28x its FY2024E EPS provides limited upside from current levels.
“We expect near-term earnings to remain under pressure, given expectation of continued margin pressure in the POC segment. We have cut our FY2023/FY2024/FY2025 earnings estimates to factor lower POC revenue/margin assumption,” the brokerage has said.
Gland Pharma
According to Sharekhan, Gland Pharma Limited’s (Gland’s) Q3FY23 performance was hit by a shortage of certain components, production delays and heightened competition in the injectables segment in the US. Revenues declined by 11.8% y-o-y, while PAT declined by 15.0% y-o-y to Rs. 938.3 crore and Rs. 231.9 crore, respectively. EBITDA margins of 30.9% contracted by 195 bps y-o-y, while gross margins improved by 183 bps y-o-y to 54.5%. Core markets (US, Europe, Canada, and Australia) registered a decline of 10.5% y-o-y, while India revenues declined by 31.9% y-o-y, while Rest of the World (RoW) declined by 4.3% y-o-y.
“Stock has corrected by 58.3% in the past one year and currently trades at 17.5x/12.9x its FY2024E/ FY2025E EPS, which factors in near-medium term headwinds. We downgrade it to Book-out from Hold,” the brokerage has said.
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