HDFC Securities is bullish on Larsen and Toubro Infotech has recommended buy rating on the stock with a target price of Rs 2240 in its research report dated January 19, 2019.
HDFC Securities' research report on Larsen and Toubro Infotech
L&T Infotech (LTI) posted strong revenue (broad-based across verticals/geo) and steady operating performance. Strong momentum in non-top-5 accounts (65.5% of rev) at 8.4% QoQ, while top-5 (34.5% of rev) decelerated to 0.6% QoQ. Revenue came at USD 347mn, 6.1/20.6% QoQ/YoY in CC terms. EBITDA% was flat QoQ at 20.6% with lower gross margin, offset by SG&A leverage. APAT at Rs 3.76bn, -6.2% QoQ was impacted by Fx loss of Rs 60mn (vs. forex gain of Rs 711mn in 2Q).
Expect USD rev/EPS to grow at 14/16% CAGR over FY18- 21E. Factored USD rev growth at 18.9/11.6/13.2% for FY19/20/21E implying CQGR of 3.3/2.6/3.3%, respectively. EBITDA% factored at 20.2/19.0/19.1% for FY19/20/21E. Maintain BUY with TP of Rs 2,240, 22x Dec- 20E and supported by >50% RoIC and >5% FCF yield.
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