Buy L&T Technology Services; target of Rs 1860: HDFC Securities

HDFC Securities is bullish on Larsen and Toubro Technology Services has recommended buy rating on the stock with a target price of Rs 1860 in its research report dated May 04, 2019.

Broker Research

May 06, 2019 / 13:31 IST

HDFC Securities' research report on Larsen and Toubro Technology Services

Revenue at USD 191mn, up 3/20% QoQ/YoY CC and FY19 growth of 26.5% CC. Revenue guidance of 14 to 16% for FY20, post the USD 30mn impact of project ramp-down (Hi-tech a/c). Growth in 4Q was led by Transportation (33% of rev), Process industry (15% of rev) and Medical devices (7% of rev) verticals which grew 6.8/5.2/7.6% QoQ respectively. Among geos, growth was NorthAm (58.9% of rev) led at 5% QoQ. Transportation, Industrial and Oil & Gas verticals expected to drive growth in Europe. Top-10 accounts performance impacted by large Hi-tech account (1-month impact in 4Q). Active client base increased to 251 (robust net additions) and deal wins were strong (9 multi-million deals). We expect broad-based vertical performance in FY20.

Outlook

We maintain BUY on LTTS after a strong 4Q performance. Industry-leading growth in FY19 and we expect growth leadership to continue. Our TP at Rs 1,860 is based on 20x FY21E EPS.

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