MOSL: L&T INFOTECH (Neutral)-Growth momentum intact, strong near-term visibility
L&T Infotech: Growth momentum intact, strong near-term visibility
(LTI IN, Mkt Cap USD3.9b, CMP INR1653, TP INR1850, 13% Upside, Neutral)
- In-line quarter, traction among the best in tier-II IT: LTI’s CC revenue growth of 3.5% QoQ (+22.9% YoY) was in line with our estimate. Subsequently, 1HFY19 revenue growth came in 22% YoY, as against +17% YoY in FY18. EBITDA margin expanded 110bp QoQ to 20.5% (our estimate: 20.4%). Gross margin of 35.1% (-10bp QoQ), too, bettered our estimate of 34.7% due to lower SGA expenses (-110bp QoQ to 14.6%; our estimate of 15.2%). PAT increased 11% QoQ (in line with our estimate of +10%) to INR4b in the quarter. Cash conversation was healthy, with OCF/PAT at 96.5% in 2QFY19 and 71.6% in 1HFY19.
- Smaller verticals perform well: CPG/Retail/Pharma (+15% QoQ CC), Energy & Utilities (+9.1% QoQ CC) and Others (+10.1% QoQ CC) were the key drivers of 2Q growth. These segments account for 25.6% of overall revenue. The larger verticals of BFS (30% of revenues; +0.2% QoQ CC), Insurance (18% of revenues; +0.9% QoQ CC) and Manufacturing (15.4% of revenues; +1.4% QoQ CC) exhibited a relatively muted performance. That said, YoY traction in BFS (+34% YoY CC) and Manufacturing (+19.3% YoY) was robust. Digital grew by 12% QoQ in the quarter, now constituting 37% of revenue.
Larsen & Toubro Infotech Limited is an India-based company, which is engaged in computer programming, consultancy and related activities. The Company's business segments include Industrials Cluster and Services Cluster. The Industrials Cluster segment consists of the business verticals of energy and process, consumer packaged goods, retail and pharmaceuticals, hi-tech and consumer electronics, automotive and aerospace, plant equipment, and utilities, engineering and construction. The Services Cluster segment consists of the business verticals of banking and financial services, insurance, media and entertainment, travel and logistics, and other miscellaneous business verticals. The Company offers a range of services, such as Analytics & Information Management (AIM), Consulting, Internet of Things, Applications Management, Enterprise Integration, Industrial Internet of Things, System Integration, Assurance Services, Geographical Information System (GIS) and Infrastructure Management.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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