Sharekhan's research report on Larsen and Toubro Technology Services
Q4FY22 revenue growth moderated to 3.6% q-o-q due to weak growth in medical devices vertical, while EBIT margins beat our estimates despite higher attrition, lower utlisation and rising onsite mix. The quarter saw a record-high deal TCVs and good client mining. LTTS guided for revenue growth of 13.5-15.5% in USD terms for FY2023, broadly on the expected line, which implies USD CQGR of 3.0-3.7%. The management is confident of achieving over 18% EBIT margin in FY2023. LTTS is well-poised to garner higher market share among global competitors given its multi-domain expertise, a full-service model in engineering space and a robust client base. It is one of the best plays in the fast-growing ERD space.
Outlook
We maintain a Buy on LTTS with a revised PT of Rs. 5,350, given consistency in large deal intakes, continued strong growth in transportation vertical and pick-up in digital engineering spends across verticals.
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