Buy Larsen and Toubro Technology; target of Rs 3500: Sharekhan

Sharekhan's research repor on Larsen and Toubro Technology

Q2 numbers beat expectations on all fronts, along with a robust deal pipeline and strong OCF generation; margin improvement remained impressive. Both the digital and core business grew 18.4% and 6.3% y-o-y. Management indicated that Q3FY2021 revenue would surpass revenue seen in Q4FY2020; we believe that the company would comfortably beat guidance given prudent client mining, continued growth in top account and superior execution. Consistency in deal wins, must-have logos and prudent client mining would help company outperform peers over the next few years. We expect LTI’s USD revenue/earnings to clock a CAGR of 15%/18% over FY2020-FY23E.

Outlook

We stick to our Buy rating on L&T Infotech (LTI) with a PT of Rs. 3,500, on expectation of industry-leading growth momentum post COVID-19.

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