Buy Larsen and Toubro Technology: target of Rs 3570: ICICI Direct

ICICI Direct's research report on Larsen and Toubro Technology

Larsen & Toubro Infotech (LTI) reported a healthy set of Q2FY21 numbers both on the revenues and margins front. Constant currency dollar revenues increased 2.3% QoQ (above our estimate of 1.5% QoQ) while margins increased 279 bps QoQ to 22.9% (above our estimate of 20.5%) mainly led by higher offshoring and increase in utilisation. Digital (41% of revenues) grew 5.8% QoQ, 18.4% YoY. The company has also won a large deal with net new TCV in excess of US$40 million in analytics.

Outlook

Hence, we upgrade the stock from HOLD to BUY with a revised target price of Rs 3,570 (24x FY23E EPS).