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Arihant Capital\’s research report on Larsen and Toubro Infotech
L&T Technology Services (LTTS) has reported strong Q2FY22 numbers, above our estimate on all fronts. Raised revenue growth guidance for FY22 from 15-17% to 19-20%. The company clocked a revenue of US$217.4 mn, +5.7% QoQ/+22.1%YoY against our estimate of US$ 214 mn. The growth was driven by strong performance in Medical Devices( up 9.6% QoQ) and industrial products( up 8.6% QoQ). Digital revenue grew from 54% of revenue in Q1FY22 to 55% in Q2FY22. The consolidated revenue stood at INR 16,077 Mn, +5.9%QoQ /+22.4% YoY against our estimate of INR 15,897 Mn. EBIT of INR 2,964 Mn +13%QoQ/+64.6%YoY was higher than our estimate of INR 2,686 Mn. EBIT margin of 18.4%, 116bps QoQ/+473bps YoY against our estimate of 16.9%. 5th consecutive quarter of improvement in EBIT margin.
We value LTTS at a PE of 43x to its FY24E EPS of INR 127, which yields a target price of INR 5,461 per share. We maintain our Hold rating on the stock.
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