Larsen & Toubro Infotech (LTI) reported a healthy set of Q3FY21 numbers both on the revenues and margins front. The company's constant currency dollar revenues increased 5.3% QoQ (above our estimate of 5.0% QoQ) and margins increased by 35 bps QoQ to 23.2% (vs our estimate of 22.9%). Digital (44% of revenues) grew 9.5% QoQ and 17.5% YoY. The company has also won two large deals with net new TCV of US$278 million.
Valuation & Outlook
LTI has outperformed its mid cap and large cap peers in revenue growth in Q3FY21. We expect the company to continue to register Industry leading growth led by it's ability to win large deals, presence in niche verticals, effectively mine clients, adding Fortune 500 clients, ability provide end to end solution and digital prowess. However, the current price factors in most of the positives and hence we downgrade the stock from BUY to HOLD with a revised target price of Rs. 4580 (30x PE on FY23E EPS) (earlier target price of Rs. 3850).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_LTInfo_Q3FY21.pdf
Shares of Larsen & Toubro Infotech Ltd was last trading in BSE at Rs.4100 as compared to the previous close of Rs. 4093.1. The total number of shares traded during the day was 20327 in over 4960 trades.
The stock hit an intraday high of Rs. 4239 and intraday low of 4065. The net turnover during the day was Rs. 84448946.