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Robust growth in revenues continues…

About the stock:

Larsen & Toubro Infotech (LTI) offers application development, IMS, digital solution services to BFSI, retail, health, media & hi-tech verticals.

* LTI has 71 Fortune-500 clients with presence in North America & Europe

* LTI has grown at 14% CAGR over FY18-21 with robust margins (~19%)

Q1FY22 Results:

LTI reported robust Q1FY22 results.

* Dollar revenues increased 5.1% QoQ to US$470.2 million

* EBITDA margin declined 318 bps QoQ to 18.7%

* Declared a dividend of | 10/share

What should investors do?

LTI share price has grown by ~6x over the past five years (from ~| 692 in July 2016 to ~| 4288 levels in July 2021).

* We remain further positive and retain our BUY rating on the stock

Target Price and Valuation: We value LTI at | 5065 i.e. 35x P/E on FY23E EPS

Key triggers for future price performance:

* LTI’s ability to deliver end-to-end solutions to help in registering industry leading growth

* Ability to win large deals, presence in niche verticals, effectively mine clients, adding Fortune 500 clients, and digital prowess other key drivers

* Vendor consolidation opportunity and digital acceleration. We expect LTI to register 18% CAGR in FY21-23E

Alternate Stock Idea:

Apart from LTI, in our IT coverage we also like Mindtree.

* Industry leading growth and healthy margins prompt us to be positive on the stock  BUY with a target price of

* 3,065

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