Hi Visvanath, to be honest, I did not consider LDAP issues. We have multiple WordPress servers and Java applications running on Tomcat servers that all use the same LDAP service to authenticate users and none of them has performance issues. They are all configured to use the DNS name just like Moodle.
I am going to try the approach that Leon suggested and try my test with 6 manually authenticated users and see if we still experience the performance degradation.
The fact that other sites communicate with the LDAP without delays suggests that there is nothing fundamentally wrong with the LDAP. Still one never knows. I do ad-hoc tests with the CLI tool ldapsearch. There must be more sophisticated ones.
Yes, eliminating LDAP by testing with manual accounts would be another approach.