ICICI Securities has given Reduce recommendation for Larsen and Toubro Infotech with a target price of Rs. 4986 in its research report issued on Apr 20, 2022

ICICI Securities research report on Larsen and Toubro Infotech

Larsen & Toubro Infotech (LTI) disappointed with a weak set of Q4FY22 earnings on various fronts. Revenues were way below our estimate at US$570mn (+3.6% QoQ CC vs Isec. est. of +5.3% QoQ CC). We would like to highlight that in LTI also (like Infy and TCS), we have seen softening of BFS growth – just 2.8% QoQ vs avg. of 10% in last 3 quarters. For LTI, H1 is seasonally weak and we expect more moderation of BFS growth ahead. Even Top-5 client growth was at a six-quarter low at ~3% QoQ (avg. of 6% in last four quarters). BFS revenue growth always moves in tandem with overall revenue growth of LTI (Chart 1).

Outlook

We are estimating revenue growth of 19%16% with EPS of Rs143/178 for FY23/24, respectively. LTI trades at an expensive valuation of 38x/31x for FY23E/24E; we downgrade to REDUCE from Hold. We value LTI at 28x (vs 32x earlier) on FY24E EPS of Rs178 to arrive at a TP of Rs4,986 (prior: Rs5,921).

More Info

At 14:20 hrs Larsen & Toubro Infotech was quoting at Rs 5,123.75, down Rs 362.40, or 6.61 percent.

It has touched an intraday high of Rs 5,465.00 and an intraday low of Rs 5,106.30.

It was trading with volumes of 90,117 shares, compared to its thirty day average of 16,417 shares, an increase of 448.92 percent.

In the previous trading session, the share closed down 6.49 percent or Rs 380.50 at Rs 5,486.15.

The share touched its 52-week high Rs 7,595.25 and 52-week low Rs 3,525.95 on 04 January, 2022 and 17 May, 2021, respectively.

Currently, it is trading 32.54 percent below its 52-week high and 45.32 percent above its 52-week low.

Market capitalisation stands at Rs 89,820.44 crore.

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