Buy L&T Infotech Ltd For Target Rs. 4,550 - Yes Securities
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Result Highlights
* It reported strong result with revenue growth of 4.6% in USD term to $447.4mn (up 4.4% QoQ in CC terms). In INR terms, revenue grew 3.7% QoQ, adversely impacted due to INR appreciation. Revenue growth was led by strong performance in Hi‐Tech and Media and BFSI verticals.
* Digital revenue grew 7.5% QoQ to account for 45.6% of revenue compared to 44.4% in Q3FY21.
* EBIT margin declined by 133 bps QoQ to 19.4% as per market expectation.
* Deal win momentum remained strong as it closed two large deals with net new TCV of $66mn.
* Offshore revenue mix continues to grow as it grew by 20 bps QoQ to 45.9%.
* LTM attrition was almost flat at 12.3% in the quarter. Utilization was down 190 bps QoQ with more hiring in the quarter.
* The board recommended final dividend of Rs 25/ share (FY21 payout: 36%).
Our view:
The performance of the company continues to remain strong as it remains focused on growth while maintaining stable margin. Strong order book and robust deal pipeline would help it to maintain the performance going ahead. The company is well placed to ride the digitalization and cloud migration wave and remains a consistent performing IT company. It trades at attractive valuation of PE of 24.2x on FY23 earnings. Initiate coverage on the stock with BUY rating.
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