Prabhudas Lilladher's research report on Larsen and Toubro Infotech
LTI reported massive beat on revenue at $509 mn, +8.9% QoQ CC, +8.3% QoQ USD (Ple: 5.5%, Cons: 3.5%). Growth was broad-based across verticals, geographies and service lines. Historically H2 has been seasonally strong and same trend is expected to continue in H2FY22. LTI won one new large deal in Europe with TCV of $30mn for 5 years. Management mentioned that deal pipeline is robust with number of large deals. Growth is constrained only by supply and without supply constraints LTI would have grown at much higher rate given extremely strong, secular and sustainable demand environment.
Our EPS estimates increase by 4.4%/4.8%/6.6% for FY22/23/24E led by increase in revenue growth estimates. We arrive at DCF based TP of INR 6,710 (implied target multiple of 37x P/E on FY24 EPS). LTI is currently trading at 37.9x/33.0x earnings multiple on EPS of 156.0/178.8 for FY22/23E with Revenue/EPS CAGR of 17.2%/18.3% over FY22-24E. LTI continues to remain one of our preferred pick in midcap IT space.