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MOSL: L&T INFOTECH (Buy)-Encouraging strength in deal pipeline

(LTI IN, Mkt Cap USD4.0b, CMP INR1634, TP INR2030, 24% Upside, Buy)

We attended L&T Infotech's (LTI) analyst day. Key takeaways:
** While continuing with the current strategy, LTI outlined a few dimensions of further focus: (i) industry centric plays, (ii) productisation of services, (iii) people and (iv) capabilities.

** Large/overall deal pipeline is stronger than a year ago by 20%/42%. The strong focus on new logo addition translated into higher share of new logos in the pipeline (35% v/s 19% a year ago). However, the share of new-age deals has moderated marginally (37% v/s 43% a year ago).

** Reskilling of 50% of workforce was completed over the last one year, leading to 33% higher fulfillment. Capability agenda is premised on addition of capabilities both organically and via partnerships.

** Regarding the recent Department of Homeland Security (DHS) visit at its New Jersey office, management reiterated that LTI is committed to the highest level of integrity and thus it should not be a cause for concern. The strength in the deal pipeline brings further conviction to our Buy stance.

Continuity in strategy with a few areas of further focus
LTI hinted at ~30% improvement in the customer experience index and a strong increase in employee morale. While continuing with the current strategy, it outlined a few dimensions of further focus: (i) industry centric plays, (ii) productisation of services, (iii) people and (iv) capabilities. While productisation of services has been a strategy emphasized by a few larger competitors, we understand that the results so far have been mixed. We will have to wait and watch how differently LTI executes here compared to others.