L&T; Infotech Ltd. (LTI) reported sturdy results in terms of top line in Q2FY20. LTI posted strong revenue growth of 2.4% on QoQ basis and 11.9% on YoY basis in constant currency (CC) terms for the period of Q2FY20 at Rs.2, 570 crs.

LTI's strong pedigree is reflected in its (1) Broad-based vertical presence (and sub-vertical strategy) with marquee accounts, (2) Strong client mining programs and large deal portfolio, and (3) Leading margin/return metrics vs. peers. Client specific challenges (in BFS and Hi-tech) have probably troughed and large deal trajectory is expected to improve growth momentum hereon. Our revenue/EPS CAGR over FY19-22E is ~10/8%. The stock is not inexpensive at 16.9x FY21E, but we believe LTI has the pedigree to command higher valuations as earnings growth becomes more visible. We maintain BUY on L&T; Infotech (LTI) following an in-line rev/margin performance and unchanged est. Large deal wins, deal ramps and reduction in client-specific challenges provide growth visibility (2H acceleration). Our TP of Rs 1,845 is based on 18x Sep-21E EPS.

LTI confirmed that the worst is over as regards the decline in the revenue from the topclient. However, it expect decline in revenue from another top-10 client in the BFS vertical in Q2FY20. Also, there have been ramp-down in couple of deals. This is likely to impact its growth in Q2FY20, however it is still confident of a QoQ growth. We factor slower growth for Q1/Q2FY20 and cut our FY20/21E revenue (in US$) by 2.5%/1.8% and EPS by 6.7%/5.7%. We now forecast FY19-21E revenue (US$)/EPS CAGR of 13.6%/9%. We remain confident of LTI gaining back the high growth momentum in...

Despite the client-specific hiccups, strong pipeline, large deal wins and investments in digital provide growth visibility. LTI's strong pedigree is reflected in its (1) Marquee account base (66 in F-500), (2) Strong client mining (supported by ADEA and Minecraft programs) reflecting in top 11-20 and focus on large deals, (3) Sub-vertical strategy (e.g. insurance), and (5) Leading margin/return metrics vs. peers. Revenue/EPS CAGR over FY19-22E estimated at 11/10%. Key risks include extended period of spend cuts by large accounts and INR appreciation. We maintain BUY on L&T; Infotech (LTI) post a soft (in-line) 1QFY20. Cut estimates by ~4% to factor near-term client-specific challenges, however deal wins provide growth visibility. Our TP of Rs 2,115 is based on 20x Jun-21E EPS.

L&T; Infotech (LTI) reported a sedate Q1FY20 with 1% QoQ CC revenue growth and 16% EBIT margins

Performance during the quarter was dragged by volatility in top accounts. Revenues from the top 6-10 clients declined 6.7% sequentially. EBIT margin during the quarter stood at 16%, declining 170bp sequentially. Decline in margins was led by (a) visa cost - 100bp, (b) sales and marketing investments - 100bp, and (c) currency movement - 20bp. The decline was partially offset by higher working days and adoption of IND-AS, which contributed +25bp to the margins. has suffered over the last couple of quarters due to spending cuts in its top account. While this bottomed out in 1QFY20, there are other top accounts with specific issues, which would weigh down near-term revenue growth. Completion of project from a large African client and ramp-down in certain sizeable accounts should offset the revenue visibility from net-new deals in 2QFY20. For now, LTI expects normal growth to resume from 3QFY20.

Client specific issues to drag FY20E, growth to recover in FY21E The company in Q1FY20 was impacted by client specific challenges in top account. Vertical wise, the company's BFS growth was impacted by client specific issues while manufacturing and energy & utilities registered a dip in revenues due to absence of pass through revenues. This is also reflected in its top five and top 10 clients, which have declined 2.1% QoQ and 3.5% QoQ, respectively. Going forward, client specific issues are expected to continue in BFS vertical while loss of client in high-tech, media &...

LTI disappointed with soft organic growth of 0.8% CC with sharp decline in Change in Estimates | Target | Reco margins also. LTI reported CC revenue growth of 1.9% QoQ of which 1.1% was contributed by Nielsen+Partner and Ruletronics acquisitions. Weak...

LTI's strong pedigree is reflected in its (1) Marquee account base (66 in F-500), (2) Strong client mining (supported by ADEA and Minecraft programs), (3) Sub-vertical strategy (eg insurance), (4) BFS scale-up (Temenos alliance) supported by acquisitions, and (5) Leading margin/return metrics vs. peers. Strong pipeline and order book, large deal wins with traction in core modernization projects provides visibility. Expect rev/EPS CAGR of 12/9% and upside to current valuations (currently at 16x FY21E). Key risks include INR appreciation and sustained slowdown in BFS (top account). We maintain BUY on L&T; Infotech (LTI) post a slight miss in 4QFY19. Pipeline, order wins (ex-top a/c) provide growth visibility. Our TP at Rs 2,095 is based on 20x FY21E EPS.

LTI posted broad-based and strong 20.9% yoy CC growth in FY19 - most likely industry leading too. Despite the structural slowdown in IT spending by the Top client, LTI expects to post top-quartile growth and stable NPM (in the narrow band of 15%) in FY20. Ex-Top client, the outlook for the BFSI vertical continued to remain strong, with two large deal wins (>USD50mn+) in FY19. This comes as a key positive after indications of weak demand in the BFSI vertical by Cognizant post its Q1CY19 results on May 02, 2019. USD100mn+), fruitful client mining efforts (5 USD50mn+ clients vs. 4 in FY18), and healthy addition of marquee Fortune-500 clients (66 now vs. 59 in FY18)....

Focus on non BFS vertical, deal pipeline to drive growth Revenue growth was strong at 19.1% YoY (dollar terms) led by broad based growth across verticals and digital segment. In FY20E, the management expects revenue growth to be healthy on the back of healthy demand environment, deal pipeline and 35% YoY jump in order book in FY19. Growth in BFS (largest revenue contributor by vertical) could witness a slowdown in FY20E on the back of client specific challenges in top account. However, LTI has a knack of winning large deals (two large deals in excess...

3 May 2019 LTIs FY19 CC revenue grew 20.9% with INR EBITDA/PAT growth at 56%/31%. LTI announced full-year dividend of INR28/share, pegging the total payout at ~32%. For 4QFY19, CC revenue grew 17.5% YoY (v/s est. of 18%), EBITDA grew 35% YoY (v/s est. of 34%), Net Sales EPS (INR) Gr. (%) BV / Sh (INR) ROE (%) ROCE (%) Payout (%) P /E (x) P / BV (x) Div. Yield (%) 94.5 105.9 123.0 94.0 106.2 279.6 351.

19 March 2019 L&T; has entered into a share purchase agreement with V.G. Siddhartha, Coffee Day Enterprise and related parties for the acquisition of 3.3m equity shares aggregating to 20.32% of the paid-up equity capital at a price of INR980 per share. In addition to this, L&T; has also placed a purchase order for 2.4m shares (15%) at a maximum price of INR980/share in the open market. Lastly, it will make an open offer for another 31% at INR980/share. If all transactions go through, L&T; will hold a 66% stake in MTCL with a total outflow of INR107.3b (Link). MTCL has a lower net margin (10-11%) than LTI (15-16%). L&T; expects to drive some opportunities to improve the net margin at MTCL, as it saw in the past with LTI. MTCL promoters (current) expressed their disapproval of L&Ts; intent to buy a controlling stake, and cited that the deal is value destructive for all stakeholders.

Larsen & Toubro Infotech Limited (LTI) incorporated in 1997, a subsidiary of Larsen& Toubro Limited is a global technology consulting and digital solutions company. LTI has delivered double digit (YoY constant currency) revenue growth momentum over more than Eight straight quarters.

Maintain BUY with TP of Rs 2,240, 22x Dec-20E and supported by >50% RoIC and >5% FCF yield. L&T; Infotech (LTI) posted strong revenue (broad-based across verticals/geo) and steady operating performance. Strong momentum in non-top-5 accounts (65.5% of rev) at 8.4% QoQ, while top-5 (34.5% of rev) decelerated to 0.6% QoQ. Revenue came at USD 347mn, 6.1/20.6% QoQ/YoY in CC terms. EBITDA% was flat QoQ at 20.6% with lower gross margin, offset by SG&A; leverage. APAT at Rs 3.76bn, -6.2% QoQ was impacted by Fx loss of Rs 60mn (vs. forex gain of Rs 711mn in 2Q).

LTI reported qoq revenue growth of 6.1% in CC terms, which came in ahead of our expectation of 3.6%. A continuation in strong growth momentum (3.5/5.1/4.5/8.3% growth in the past four quarters), coupled with healthy margin improvement (up ~400bps yoy in 9MFY19), points to industry-leading growth and margin performance in FY19E. EBIT margin, ex-hedge gains, at 19.1% improved ~10bps qoq, largely on the back of SG&A; optimization (down 40bps qoq). Ruletronics, which LTI acquired recently for USD7.5mn (~2.2x FY18 sales), is a Pega' consulting company, and provides additional growth opportunities in the BPM, CRM, and Process automation space for LTI....

Larsen & Turbo Infotech (LTI) recently hosted its analyst day in Mumbai. LTI is a technology and digital solutions company with a presence in BFSI (47.8% of revenue), manufacturing (15.4%), hi-tech, media & entertainment (11.2%), energy & utilities (10.7%) and CPG, retail & pharma (10.2%). In coming years, the company is planning to increase its focus on life science, consumer package goods and hi-tech. The company reiterated its growth engines as winning large deals, new logos and client mining and its continuous efforts in driving the same. Visible signs of it...

Larsen & Toubro Infotech (LTI) at its investor and analyst day reiterated that revenue growth in FY19 would be better than the 16.7% YoY growth in FY18. Further, it expects the industry-leading growth to sustain in FY20 as well. Importantly, it remains confident...