Emkay Global Financial has given Hold recommendation for Larsen and Toubro Infotech with a target price of Rs. 6350 in its research report issued on Apr 20, 2022

Emkay Global Financial’s report on Larsen and Toubro Infotech

LTI’s Q4 operating performance came in below our estimates. Revenues grew by 3.1% QoQ to USD570.4mn (3.6% CC), missing estimates partly due to onsite supply challenges. EBITM declined 60bps to 17.3%, below our estimates. Revenue growth was broad-based, driven by CPG, Retail & Pharma (7.7& QoQ CC), E&U (4.1%), Insurance (3.8%), BFS (3.3%), Others (3.3%), Manufacturing (2.3%) and Hi-Tech, M&E (2.2%). All geographies, except RoW, reported positive sequential growth. LTI is confident of delivering a top-quartile revenue performance in FY23 on strong broadbased demand, large deal intake and pipeline, conversations with clients, and good progress on client mining. It signed 4 large deals with net new TCV over USD80mn in Q4.

Outlook

We cut our FY23/FY24 EPS estimates by 3.7%/2.5%, factoring in the Q4 performance miss and softness in onsite volume in H1. We maintain Hold with a TP of Rs6,350 (Rs6,500 earlier) at 34x Mar’24E EPS.

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