Prabhudas Lilladher has given Buy recommendation for Larsen and Toubro Infotech with a target price of Rs. 6710 in its research report issued on Dec 09, 2021

Prabhudas Lilladher’s research report on Larsen and Toubro Infotech

We attended LTI’s analyst day held on 9th Dec 2021. LTI’s senior management outlined their strategy to sustain track record of consistent revenue growth and be in leader’s growth quadrant by -1) scaling up tech capabilities (data, cloud and digital), 2) mining existing strategic clients, 3) investing in new high potential verticals and markets, and 4) building sales and marketing teams. Management mentioned that demand continues to be strong across all verticals, markets and service lines. New large deal pipeline is at $2.07 Bn, 9% YoY growth (vs 60% YoY last year) indicates demand shifting towards medium-sized short cycle deals driven by discretionary spends as clients are using technology for revenue maximization and faster go-to-market.

Outlook

Our DCF based TP is INR 6,710 (implied target multiple of 37.5x P/E on FY24 EPS). LTI is currently trading at 42x/37x earnings multiple on FY23/24 EPS of 156.0/178.8 with Revenue/EPS CAGR of 17.2%/18.3% over FY22-24E. Maintain Buy.

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