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L&T Infotech stock buy

Dear investor,

Please find below mentioned short term fundamental stock for delivery purpose.

 

Company

CMP

Target

BSE Code

NSE Code

L&T Infotech Ltd.

1850

1995

540005

LTI

 

L&T InfoTech Ltd (LTI) is one of India's global IT services and solutions companies. The company is a global technology consulting and digital solutions providing company with more than 350 clients. The company has presence in 30 countries helping client accelerate their digital transformation with LTI's Mosaic platform enabling their mobile, social, analytics, IoT and cloud journeys. UTI mutual fund has the largest shareholding at 2.08%.
 

Investment rationale
 

Limited impact of Covid-19 – LTI performed relatively well with revenue growth of 4.7%/17.4% QoQ/YoY. Growth was seen across the verticals with ramp up of E&U deals and two large deal wins with a net TCV value of USD100 million. Besides, better pricing in new onsite deal led to higher realization. Digital segment continued to remain strong contributing 40.7% of revenues. However, manufacturing and energy vertical which contribute 28.2% of revenue are expected to be under pressure due to Covid-19.

 

Industrial outlook and macros are supportive to the growth - The impact of digital technologies-Analytics, Internet of Things (IoT), Cloud, Artificial Intelligence/Machine Learning, Cognitive Sciences and Mobility continues to be felt, with the growth in these segments higher than the rest. These technologies are expected to be the major growth segments in global IT spends going forward. The industry is expected to grow to US$350 billion by 2025 and BPM is expected to account for US$ 50-55 billion out of the total revenue.
 

6th largest domestic IT player with presence in 30 countries - The Company has registered USD 1.3 bn revenue for last 12 months. It has headcount of 28,000+ and has 29 delivery centres globally. The company has been growing above industry average. LTI has been named as top-15 sourcing provider by ISG for the America's region.  LTI offers an extensive range of IT services to its clients in diverse industries such as banking and financial services, insurance, energy and process, consumer packaged goods, retail and pharmaceuticals, media and entertainment, hi-tech and consumer electronics and automotive and aerospace. Its range of services includes application development, maintenance and outsourcing, enterprise solutions, infrastructure management services, testing, digital solutions and platform-based solutions.
 

Outlook and valuation – Company has delivered a strong Q4FY20. We acknowledge the fact that company’s manufacturing and energy vertical would continue to remain under pressure and might face delay in ramp up. However, the company’s digital vertical has remained strong and is expected to get better in the coming quarters. The company has delivered a strong growth consistently and has healthy balance sheet with Net Debt/Equity ratio of -0.4x and cash balance of Rs525crore to weather the Covid storm. The stock is currently trading at a one year forward P/E of 19.7x.

Duration of recommendation: Short to Medium term.
 

Best Regards

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