Larsen & Toubro Infotech (LTI) reported a healthy set of Q2FY21 numbers both on the revenues and margins front. Constant currency dollar revenues increased 2.3% QoQ (above our estimate of 1.5% QoQ) while margins increased 279 bps QoQ to 22.9% (above our estimate of 20.5%) mainly led by higher offshoring and increase in utilisation. Digital (41% of revenues) grew 5.8% QoQ, 18.4% YoY. The company has also won a large deal with net new TCV in excess of US$40 million in analytics.
Valuation & Outlook
LTI is expected to be a key beneficiary of recent trends of multi-year technology transformation phase. In addition, the company's ability to win large deals, effectively mine clients, adding Fortune 500 clients and acquire new clients will enable it to deliver industry leading revenue growth in coming years. This, coupled with a healthy margin performance prompt us to revise our EPS estimates upwards. Hence, we upgrade the stock from HOLD to BUY with a revised target price of Rs. 3,570 (24x FY23E EPS).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_LTInfo_Q2FY21.pdf
Shares of Larsen & Toubro Infotech Ltd was last trading in BSE at Rs.3105 as compared to the previous close of Rs. 2964.65. The total number of shares traded during the day was 38547 in over 6422 trades.
The stock hit an intraday high of Rs. 3139 and intraday low of 2984.35. The net turnover during the day was Rs. 119486715.