Arihant Capital recommended accumulate rating on Larsen and Toubro Technology Services with a target price of Rs 1227 in its research report dated May 17, 2020.
Arihant Capital 's research report on Larsen and Toubro Technology Services
L&T Technology Services’ (LTTS) Q4FY20 earnings were mixed beating our revenue estimates but EBITDA and PAT came below our estimates. Consolidated revenue for Q4FY20 stood at Rs 14,466mn registering +7.7% YoY/+1.7% QoQ, EBITDA increased 7.7% YoY/declined 6.3% QoQ to Rs 2,683mn and PAT increased 7.2% YoY/0.2% QoQ to Rs 2,063mn. Constant currency Revenue (USD) stood at $194 million, up by 1.6% YoY/down 2.5% QoQ, due to COVID-19 outbreak as the company faced supply side constraints and demand side challenges resulting in loss of productivity and work from home for employees. EBIT stood at Rs 2,812mn growing 10.0% annually and declining 0.8% sequentially. The company’s board has recommended a final dividend of Rs 13.50 per share.
The management also stated that business related to oil sector will find this a difficult year while medical technologies and telecom segments should do well. We value the stock at an exit P/E of 13.5x, to arrive at a target price of Rs 1,227 per share. We downgrade our rating to Accumulate from Buy earlier.
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