LTIMindtree Ltd. share price target

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...

In a seasonally not so strong quarter, Larsen & Toubro Infotech (LTI) impressed with robust (~8.9% QoQ, CC) and broad-based growth – across verticals, geographies and service lines. What differentiates LTI from most other IT companies is the strong growth despite a tall base in FY21 [Sep-19 to Sep-21].
revenue (USD) CAGR (YoY) = 18% vs 14% of Mindtree, 12% of Infosys, 7% of TCS
and 6% of HCLT].

LTI witnessed broad based growth in the current quarter and was significantly higher than our estimate. Going forward, the company is seeing healthy traction in revenues led by robust deal pipeline and client mining. In addition, the company expects to add ~5K freshers & ~1K laterals leading to healthy revenue visibility. As a result the company expects H2FY22 growth to be better than H1FY22 (~23.2% YoY) and to be in leaders quadrant among mid cap companies. In addition, the company expects PAT margin in the range of 14-15% band. We expect LTI to grow at ~28% YoY and PAT margins to be higher than guided range at 16% in FY22. Despite our robust assumption,...

LTI reported massive beat on revenue at $509 mn, +8.9% QoQ CC, +8.3% QoQ USD (Ple: 5.5%, Cons: 3.5%). Growth was broad-based across verticals, geographies and service lines. Historically H2 has been seasonally strong and same trend is expected to continue in H2FY22. LTI won one new large deal in Europe with TCV of $30mn for 5 years. Management mentioned that...

Best revenue growth ever at 8.3% QoQ USD in Q2, aided by secular uptick across verticals, clients, service lines and geographies

LTI's revenue growth, in USD terms, stood at 8.9% QoQ CC in 2QFY22, above our estimate of 5.4%. Growth was broad based across verticals, service lines, geographies, and client buckets. Broad based industry growth was led by BFS and Manufacturing. EBIT margin expanded by 80bp QoQ to 17.2% in 2QFY22 (est. 16.7%), led by SG&A; leverage, offshoring, and higher working days, partially offset by utilization and higher costs. The management highlighted that the demand environment is one of the strongest. It expects demand to remain strong over the next three years....

LTI reported revenue of $470.2 mn, +5.1% QoQ USD above our & cons estimates (Ple: 4%, Cons: 3.5%). Growth was broad-based across verticals led by BFS (+9.9% QoQ USD) and Hi-tech & Media (+13.1% QoQ USD). Insurance vertical is recovering aided by recent large deal wins and new leadership. LTI did not announce large deal TCV this quarter but management mentioned that demand for digital transformation is significantly higher vs pre-pandemic period. We believe that growth momentum will be maintained...

L&T; Infotech (LTI)'s 1QFY22 USD revenue growth stood at 4.8% QoQ CC, above our est. of 3.4% QoQ CC. Growth was largely led by deal ramp-ups in Hi-Tech (Injazat) and BFSI (Islamic Bank), which grew 13.2 and 8.2%, respectively. The 1Q EBIT margin contracted 300bp QoQ to 16.4% (in line with estimates). The margin decline was primarily led by a 340bp impact of wage hikes and promotions to manage attrition. Despite the absence of large new deal wins in 1Q, LTI highlighted a strong demand environment, led by a robust deal pipeline. It continues to report...