Further, the company also has set out an aggressive profitability target whereby it intends to take the margins to 17-18% from the current 15.5% (Q2FY25). For margin improvement, LTIM has its ongoing ‘Project Northstar’ exercise which envisages working around its pyramid cost, use of AI and automation, maximizing revenue per employee as well as prudence in spending on overheads.

Analysts from various research firms and brokerages who attended that meeting have had a mixed take on this plan. For instance, Nomura analysts Abhishek Bhandari and Krish Beriwal in their note say the upside risks are strong large-size deal wins and higher-than-expected margin expansion. Analysts at Emkay Global maintain that with discretionary spending yet to return and the US election uncertainty over, the coming months should provide better visibility for FY26 as clients will start finalizing their budgets.

In contrast, Motilal Oswal in a note seems to be more bullish. “We believe LTIM's strengths in data engineering and ERP modernization position it well to capture pre-GenAI investment opportunities. While margin expansion remains a key risk to our thesis due to unrealized merger synergies, we expect gradual improvement as demand strengthens,” the note said. Further, with BFSI clients increasing spending on transformation projects, the brokerage house sees the company benefitting despite its margin challenges.

However, if one takes a pragmatic look at where the company stands today, reaching the $10 billion mark seems a Herculean task. If one takes into consideration this fiscal year (FY25), the company will have to grow at a CAGR of over 11% in the next eight years. L&T acquired Mindtree in 2019, and the merger of erstwhile Larsen & Toubro Infotech Limited (LTI) and erstwhile Mindtree Limited (Mindtree) was completed in November 2022. At the end of March 22, LTI had revenue of around $2.1 billion and Mindtree at about $1.4 billion, making a combined revenue of $3.5 billion. Since the merger, at the end of FY23 LTIM’s revenue was $ 4.1 billion and the company ended FY24 at $4.3 billion, indicating a CAGR of 10.7%. This, in a volatile environment and with only a few companies in the sector willing to provide annual guidance, has many variables that could throw a spanner in its plans.

The company, as part of its growth strategy, has plans to go deeper into its top 100 accounts, increasing its cross-sell and upsell chasing large deals and adding new logos. According to the company, its top 100 accounts grew by 10% YoY in Q2 and saw a 15% increase in cross-selling in these accounts.

LTIMindtree I Debashis Chatterjee

Can LTIMindtree realise its ambitious $10-billion dream by FY32?