Hold Larsen and Toubro Infotech; target of Rs 1598: Prabhudas Lilladher
Prabhudas Lilladher recommended hold rating on Larsen and Toubro Infotech with a target price of Rs 1598 in its research report dated May 21, 2020.
Prabhudas Lilladher’s research report on Larsen and Toubro Infotech
LTI reported strong CC growth of 4.7% QoQ higher than our & street estimates of ~2.5% QoQ CC (Cons: USD growth stood at USD410mn (Ple: USD402mn, Street: USD 400 mn) grew 3.9% QoQ. Strong revenue growth was on account of i) ramp up of recently won multiple large deals in BFS, E&U & Manufacturing vertical, ii) pass thorough revenues (~2%) from manufacturing vertical. The growth was broad-based across verticals and geographies and was led by beyond Top-20 (+9.9% QoQ) accounts. Top-20 clients (+0.2% QoQ) delivered muted revenue growth. The Covid-19 impact on revenues was minimal, helped by lack of exposure to BPOs. EBIT margins further expanded by 50bps despite ~60bps drag from PM Cares fund (adj EBIT margin: 17.3%).
We value LTI now on 16x earnings multiple (earlier 14x) to arrive at a changed target price of Rs.1598 (earlier: Rs.1403). LTI is currently trading at 20.7x/17.6x earnings multiple. Valuations curtails upside now. Maintain Hold.
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First Published on May 22, 2020 05:06 pm