Sharekhan has given Buy recommendation for Larsen and Toubro Technology Services with a target price of Rs. 6350 in its research report issued on Jan 18, 2022

Sharekhan’s research report on Larsen and Toubro Technology Services

EBIT margins improved for the sixth consecutive quarter to 18.6% and beat our estimates; Q3 witnessed strong revenue growth in a soft quarter, new logo additions, record fresher intake and healthy deal bookings. The management maintained its annual USD revenue growth guidance at 19-20% despite a 20.3% y-o-y growth in 9MFY2022 as telecom vertical growth likely to remain muted in Q4. It aspires to maintain EBIT margins of 18% in the coming quarters. LTTS is one of the best plays in the fast-growing ERD space for its multi-industry expertise, deep engineering capabilities, end-to-end offerings and a quality client base. It is on track to achieve its medium-term revenue growth aspirations.

Outlook

We maintain a Buy on LTTS with a revised PT of Rs. 6,350, given strong growth runway in ERD, healthy deal wins and higher spends on digital engineering across verticals. LTTS’ net profit is likely to clock 25% CAGR over FY2022-24E.

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