Accumulate Larsen and Toubro Infotech; target of Rs 1701: Prabhudas Lilladher

Prabhudas Lilladher recommended Accumulate rating on Larsen and Toubro Infotech with a target price of Rs 1701 in its research report dated July 19, 2019.

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July 22, 2019 / 16:29 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Larsen and Toubro Infotech

LTI revenue growth in the quarter was not broad-based and showed weakness across geography, vertical and client segments. LTI posted muted growth of 1.1% CC(organic 0.5% QoQ CC) with sharp decline in margins also. Weak growth was on account of sharp revenue decline from the top client, which belongs to the BFS vertical. We saw weak growth across client metrics (Top 5, Top 10, Top 20 declined by 1.9%, 3.5% & 0.6% QoQ respectively), this also indicates lack of project renewals & weak spending pattern. EBIT margin declined by 170 bps QoQ to 16% and was impacted by three factors i) 100 bps due to S&M expenses, ii) 100 bps impact due to visa costs & (iii) 20 bps impact from appreciation of INR against USD.

Outlook

We downgrade LTI from Buy to Accumulate & value LTI at 17X FY21E multiple at an EPS of Rs.85 & Rs. 100 to arrive at a changed target price of Rs. 1701 (earlier: Rs.1981). LTI is currently trading at 18.4x/15.8x FY20E/21E earnings multiple.

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