We have buy coverage on L&T Technology Services with a target price of Rs 1,940 per share.
L&T Technology Services provides design and development solutions to clients across the entire value chain of product development.
These includes solutions in the areas of mechanical and manufacturing engineering, embedded systems, software engineering and process engineering for new-age technologies, it provides services and solutions in the areas of product lifecycle management, engineering analytics, power electronics, M2M connectivity and IoT.
With the rise of enabling technologies like 5G, IoT, Artificial Intelligence etc, the digital disruption now has expanded to almost each and every part of the global industrial complex including manufacturing and process industries. This has opened a new and bigger opportunity of more than USD 1.1 trillion market for engineering outsourcing market.
During the latest quarterly results, the company has reported robust growth in revenues; it grew 33.2 percent in Q1-FY19 to USD 168.9 million as against USD 127.6 million in Q1-FY18 in constant currency terms.
We expect company to grow its consolidated revenues at CAGR of 23 percent for the next two years and reach Rs 4,895 crore in FY19 and Rs 5,696 crore in FY-20 on back of large opportunity present across capex intensive business and sustained momentum of ramping up of existing clientsWe have buy coverage on L&T Technology Services with a target price of Rs 1,940 per share (32.88x FY19e EPS of 59)