LTIMindtree is the top Nifty 50 loser as a spate of senior-level exits continues

LTIMindtree Share Price | The stock is down over 11%, its highest since March 2020. The company’s Rupee revenue and net profit were in-line with expectations, while EBIT margin of 15.4% was lower than estimates of 15.7%.

LTIMindtree, India’s fifth largest IT services company by market capitalisation, continues to witness a spate of senior-level exits with the latest resignations of Pankaj Chugh and Gregory Dietrich, both executive vice-presidents of global sales, effective April 15.

Following the development, LTIMindtree shares lost more than 2% to become the top Nifty 50 loser. In 2024 (year-to-date), the stock has erased over 25% of investors’ wealth as against the benchmark Nifty 50 and Nifty IT index which have both risen 2% during the period.

Chugh and Dietrich’s exit follows that of Vinit Teredesai who resigned as the chief financial officer in 2024. Before that, Dilip Panjwani, then head of cyber security practice, exited the firm in January 2024.

Since the merger of Larsen & Toubro Infotech and Mindtree was announced in May 2022, which became operational in November of that year, there have been several high-profile exits from the merged entity.

Between October 2023 and December 2023, the firm has seen key officials including BFSI head Mukund Rao, health and lifesciences head Ashish Deshpande, America region head Raj Pandya, chief marketing officer Paresh Vankar, and retail and CPG head Dinesh Bajaj leave.

Earlier this year when Teredesai moved on to “explore opportunities outside the L&T group”, global brokerage firm Jefferies had highlighted that the resignation of the firm’s CFO alongside other senior-level exits suggests integration issues and the company may take longer to realise revenue synergies from the merger.

In January 2023, LTIMindtree CEO Debashis Chatterjee told Times of India that the combined entity would have revenue synergies of $1 billion and 200 basis points in cost optimisation in the next four to five years.

(In an acquisition, revenue synergy refers to generating more revenue than the entities would when operating separately.)

At the end of the December 2023 quarter, the combined entity had made $4.3 billion in revenue for the last 12 months.

However, FY24 has been a disappointing year for LTIMindtree given the revenue growth has been declining from 16% in the October to December 2022 quarter to only 3% in the corresponding three-month period in the 2023-34 fiscal year.

CC revenue YOY

The company has pushed forward its aspiration of hitting 17-18% EBIT margin in the fourth quarter of FY24 by a “few” quarters. This, at a time when its nine-month earnings before interest and taxes (EBIT) stand at 16%.

It must also be noted that a few key clients of LTIMindtree are undergoing restructuring programmes.

Meanwhile, its valuations are also not cheap at 23 times FY26e PE.