LTIMindtree senior exits point to integration issues: Jefferies

Since the merger was announced in May 2022, which became operational in November of that year, there have been several high-profile exits from the entity.

Some of the key exits include Paresh Vankar, former chief marketing officer, who quit in October 2023, Dinesh Bajaj, former senior vice-president and chief business officer, who moved on in September 2023, Venugopal Lambu, whole-time director and markets president, who quit in January 2023 and Suresh Bethavandu who quit as chief people officer of LTIMindtree in March 2023.

Following the quarterly results, earlier in January 2023, LTIMindtree CEO Debashis Chatterjee had 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.)

However, Jefferies believes that the company may take longer to realise revenue synergies from the merger. This comes as at the end of the December 2023 quarter, the combined entity made $4.3 billion in revenue for the last 12 months.

The brokerage has cut its estimate by 5-9% to reflect revenue synergies and expects the firm to deliver a 15% EPS CAGR in FY 24-26.

LTIMindtree shares have fallen 19% so far this year (year-to-date) as against benchmark Sensex which has risen over 2% during the period. The brokerage thinks the risks are in price as the stock trades at 28x, which is in line with its 5-year average.