Prabhudas Lilladher's research report on Larsen and Toubro Technology
LTI reported strong revenue growth of 2.3% QoQ CC (Ple:1.8% QoQ) & 10.5% YoY, highest among peers. In reported terms, revenues grew 3.6% QoQ to US$404.5 mn. Strong revenue growth was led by i) BFS(9.5%QoQ), ii) Manufacturing (5.4% QoQ) ii) Europe (9.3% QoQ). EBIT margin came at 19.9% (+224 bps QoQ,433bps YoY), strong beat of 227bps led by sustainable improvement in off-shore mix (170bps QoQ), higher utilization (110bps QoQ), benefit from lower SG&A, rollback of rebates gives to few clients in last quarter.
Outlook
We increase our EPS estimates by avg 2.5% for FY22E/FY23E & now value LTI at 25X(earlier 23X) to arrive at changed target price of Rs.3465(Earlier: Rs.2839). LTI is currently trading at 27x/22x earnings multiple. We believe valuation premium will continue on account of strong & stable growth, Maintain BUY!
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