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What should investors do with L&T Infotech: buy, sell or hold post Q2 results?

The IT firm's September quarter profit rose 11.1 percent at Rs 551.7 crore from Rs 496.8 crore and rupee revenue was up 8.8 percent at Rs 3,767 crore from Rs 3,462.5 crore from the previous quarter

October 19, 2021 / 10:09 AM IST
 
 
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Larsen & Toubro Infotech share price touched a 52-week high of Rs 6,680, rising nearly 14 percent on October 19 after the company reported better numbers in the quarter ended September 2021.

Larsen & Toubro Infotech's Q2 FY22 profit rose 11.1 percent at Rs 551.7 crore from Rs 496.8 crore and rupee revenue was up 8.8 percent at Rs 3,767 crore from Rs 3,462.5 crore, QoQ.

The earnings before interest and tax (EBIT) rose 14.1 percent at Rs 648.2 crore and margin was up at 17.2 percent, QoQ.

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Here is what brokerages have to say about the stock and the company in view of the September quarter earnings:

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Morgan Stanley

The research firm has kept an “underweight” rating on the stock on the back of unfavourable risk reward.

It has raised the target price to Rs 5,500 from Rs 5,150 after the company reported a strong beat on revenue.

The commentary on the sustainability of the demand environment is robust and it was nudging up its estimates, the brokerage said.

Citi

The research house has maintained “sell” rating and raised the target price to Rs 5,180 from Rs 4,770.

It was a strong Q2 as the revenue was ahead of expectations. The growth was broad-based and largely driven by small and mid-sized deals.

EBIT margin improved QoQ despite higher attrition and supply-side concerns.

Citi has raised FY22/23/FY24 estimates by 5/3/2 percent and multiple to 35x.

Sharekhan

We estimated the company to report USD revenue/EPS CAGR of 15 percent/16 percent over FY2022-FY2024E. At the CMP, the stock trades at 38x/33x its FY2023E/FY2024E earnings, which though expensive is justified given its industry-leading revenue growth prospects with stable margins, strength in addressing transformation spending, and strong return ratios.

Hence, we maintain our “buy” rating with a revised price target of Rs 6,850.

Motilal Oswal

We have raised our FY22E/FY23E EPS by around 7 percent on the back of a strong demand outlook, which led to revenue upgrades.

As the digital turns mainstream, we expect the company to benefit from continued investments in digital capabilities, strong client additions and its mining abilities. This should result in industry-leading growth.

The target price of Rs 6,430 a share implies 40x FY23E EPS. We maintain our neutral rating.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Oct 19, 2021 10:09 am

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