Accumulate Larsen and Toubro Infotech; target of Rs 1825: Prabhudas Lilladher
Prabhudas Lilladher’s research report on Larsen and Toubro Infotech
We attended LTI Analyst meet where the company shared its growth strategy & how they are well positioned to capture digital opportunities in transforming the core. The CEO mentioned that Enterprises need to master four essential plays to excel ahead 1) Digitizing the core 2) Data Driven Organization, 3) Experience transformation & 4) Operate to transform. Customer centricity remains a key aspect of LTI strategy. LTI sales & marketing initiatives are driving strong growth for the company. LTI has laid out sales strategy framework three years ago & it focusses mainly on large deal wins, growing top accounts & focusing on strategic alliances. It is aggressively focusing on large deals and new logo additions – won 19 large deals with 9 new logos in past 14 quarters, with combined TCV of large deals at ~USD 900 mn. Management is confident of strong H2FY20 on ramp-up of deals won earlier. Besides, over the last one year, LTI’s client addition across buckets was the strongest and broad-based & along with the company’s account mining capabilities, we expect LTI revenue growth to accelerate in FY21.
We value LTI on Sep-21 earnings (Rs.107.3) & arrive at an unchanged target price of Rs. 1825 (valued at 17x Sep-21 earnings). Maintain Accumulate. Ongoing investigation by US Immigration & Custom Enforcement (ICE) will remain an overhang.
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