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HDFC Securities
L&T Infotech (Buy)
CMP: ₹1,731.85
Target: ₹2,240
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 per cent of revenue) at 8.4 per cent q-o-q, while top-5 (34.5 per cent of rev) decelerated to 0.6 per cent q-o-q. Revenue came at $347 million, 6.1/20.6 per cent q-o-q/y-o-y in CC terms. EBITDA per cent was flat q-o-q at 20.6 per cent with lower gross margin, offset by SG&A leverage. APAT at ₹376 crore, -6.2 per cent q-o-q was impacted by Fx loss of ₹6 crore (versus forex gain of ₹71.1 crore in 2Q).
We remain positive on L&T Infotech based on 1) Strong account mining prowess led by ‘Minecraft’ and ‘ADEA’ programmes and marquee account base (63 from F-500); 2) Continuity in new logo wins (17 new added in 3Q including 2 from F-500); 3) Broad-based growth across verticals driven by micro-vertical focus & strengthening digital (37 per cent of rev); and 4) Continuity of large deal wins (Nets, Nordic).
Expect dollar revenue/EPS to grow at 14/16 per cent CAGR over FY18-21E. Factored USD rev growth at 18.9/11.6/13.2 per cent for FY19/20/21E implying CQGR of 3.3/2.6/3.3 per cent, respectively. EBITDA per cent factored at 20.2/19.0/19.1 per cent for FY19/20/21E.
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