Larsen & Toubro Infotech
Set to outshine peers
Rating: Buy
(CMP: 4092, Price Target: 4800)
Company Description
Promoted by Larsen & Toubro (L&T) in 1996, Larsen & Toubro Infotech (LTI) is the sixth largest ($1,525 million in FY2020) IT services company in India in terms of export revenue and is among the top-20 IT service providers globally. With operations in 27 countries, LTI provides technology consulting and digital solutions to around
289 clients across the globe.
Key Investment Arguments
➡️We stick to our Buy rating on L&T Infotech (LTI) with a PT of Rs. 4,800, anticipating that it would clock industry-leading growth.
➡️Strong quarter, with beat in EBIT margin and net profit. Company reported record-high large deal win TCVs, healthy deal pipeline, new logo additions, growth acceleration in top accounts and strong OCF generation. Digital business grew 17.4% y-o-y.
➡️Management expects a sequential revenue growth in Q4FY2021, implying a high-single digit revenue growth in FY2021. Management remains confident on delivering top quartile revenue growth in the industry in FY2022E with a stable margin.
➡️LTI could deliver industry-leading growth over next few years, led by large deal ramp-ups, deep relationship with top accounts, addition of new logos, consistency in deal wins and robust partner ecosystem. Expect LTI’s USD revenue/earnings to clock a CAGR of 16%/19% over FY2021-FY23E.
