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  • ICIC

    I S

    ecurit

    ies –

    Retail E

    quit

    y R

    esearch

    Result

    Update

    July 19, 2019

    CMP: | 1520 Target: | 1710 ( 13%) Target Period: 12 months

    Larsen & Toubro Infotech (LTINFO)

    HOLD

    Operationally weak performance…

    Larsen & Toubro Infotech (LTI) reported weak Q1FY20 results. Constant

    currency (CC) revenues grew 1.0% QoQ and 12.9% YoY. Cross currency

    headwind led to 0.8% QoQ growth in dollar revenues. Revenue growth was

    led by 2.5% QoQ growth in volumes offset by a dip in realisation. We believe

    the company’s growth was more inorganic than organic. Digital business

    now constituting 38.9% of revenues, witnessed growth of 3.4% QoQ and

    27.5% YoY in the quarter. Reported EBIT margin declined 318 bps to 16.0%

    (below our estimate of 16.9%) mainly led by a decline in high-tech, media &

    entertainment and manufacturing segment.

    Client specific issues to drag FY20E, growth to recover in FY21E

    The company in Q1FY20 was impacted by client specific challenges in top

    account. Vertical wise, the company’s BFS growth was impacted by client

    specific issues while manufacturing and energy & utilities registered a dip in

    revenues due to absence of pass through revenues. This is also reflected in

    its top five and top 10 clients, which have declined 2.1% QoQ and 3.5%

    QoQ, respectively. Going forward, client specific issues are expected to

    continue in BFS vertical while loss of client in high-tech, media &

    entertainment will dent FY20E revenue growth. However, LTI has a knack of

    winning large deals (one large deal in excess of US$40 million won in current

    quarter) and keeps on adding Fortune 500 customers, which gives us belief

    that it will be able to recoup growth from FY20E onwards. In addition, the

    company has significant strength in digital and core modernisation, which

    will help improve the deal pipeline in coming quarters. Hence, we expect the

    company to register dollar revenue CAGR of 12.1% over FY19-21E.

    Margin revised downwards but still superior to peers

    EBITDA margins of the company in Q1FY20 were impacted by 100 bps of

    higher visa cost, 100 bps S&M cost and 20 bps of employee cost partially

    offset by 20 bps benefit from lease accounting and higher number of days.

    Going forward, considering peaking of utilisation benefit, currency

    headwind and client specific issues in high margin BFS, we revise our

    EBITDA margins downwards to 18.6% and 18.7% in FY20E and FY21E from

    19.6% and 19.3%, respectively, in our previous estimates.

    Valuation & Outlook

    We like LTI based on its digital story, strength in diversified niche segments

    & core modernisation, ability to win large deals and better margin profile vs.

    industry peers. However, near term concerns of client specific challenges

    and currency headwind prompt us to revise our EPS estimates downwards

    by ~10-11% in FY20E to FY21E. Hence, we downgrade the stock from BUY

    to HOLD with revised target price of | 1,710 (18x FY21E EPS).

    Key Financial Summary

    s

    (| Crore) FY17 FY18 FY19 FY20E FY21E CAGR (FY19-21E)

    Net Sales 6,500.9 7,306.4 9,445.8 10,320.6 11,779.6 11.7%

    EBITDA 1,230.4 1,187.6 1,883.4 1,921.5 2,204.5 8.2%

    EBITDA Margins (%) 18.9 16.3 19.9 18.6 18.7

    Net Profit 971.2 1,112.5 1,515.5 1,459.2 1,680.6 5.3%

    EPS (|) 56.9 64.7 87.3 84.1 96.8

    P/E (x) 26.6 23.4 17.4 18.0 15.6

    RoE (%) 30.9 28.8 31.0 25.1 24.4

    RoCE (%) 38.7 36.0 40.4 33.0 32.2

    Source: Company, ICICI Direct Research

    Particulars

    Particular Amount

    Market Capitalisation | 26301 crore

    Total Debt | 0 crore

    Cash and Investments | 2155 crore

    EV | 24145 crore

    52 week H/L 1990 / 1438

    Equity Capital | 17 crore

    Face Value | 1

    Key Highlights

    Client specific challenges hit Q1FY20 revenue growth

    We expect revenue growth to improve post FY20E onwards

    Considering of peaking of utilisation benefit, currency headwind and client

    specific issues in high margin BFS we

    have revised our EBITDA margins

    downwards

    Downgrade the stock from BUY to HOLD with a revised target price of |

    1,710

    Research Analyst

    Devang Bhatt

    [email protected]

    Deepti Tayal

    [email protected]

  • ICICI Securities | Retail Research 2

    ICICI Direct Research

    Result Update | Larsen & Toubro Infotech

    Exhibit 1: Variance Analysis

    Q1FY20 Q1FY20E Q1FY19 YoY (%) Q4FY19 QoQ (%) Comments

    Revenue 2,484.9 2,500.6 2,155.7 15.3 2,486.0 0.0

    The company registered a growth of 0.8% QoQ in dollar terms

    which was majorly led by inorganic growth. Vertical wise

    revenues was driven by insurance (up 2.5% QoQ) and CPG,

    Retail & Pharma (up 6.2% QoQ) which was partially offset by

    Manufacturing (down 7.8% QoQ) and Energy & Utilities (down

    1.9% QoQ)

    Employee expenses 1,662.5 1,657.9 1,397.7 18.9 1,641.7 1.3

    Gross Margin 822.4 842.7 758.0 8.5 844.3 -2.6

    Gross margin (%) 33.1 33.7 35.2 -207 bps 34.0 -87 bps

    Other expenses 364.5 382.6 339.0 7.5 367.8 -0.9

    EBITDA 457.9 460.1 419.0 9.3 476.5 -3.9

    EBITDA Margin (%) 18.4 18.4 19.4 -101 bps 19.2 -74 bpsEBITDA margins declined led by decline in High-Tech, Media &

    Entertainment and manufacturing segment.

    Depreciation & amortisation 61.1 37.5 37.8 61.6 37.1 64.7

    EBIT 396.8 422.6 381.2 4.1 439.4 -9.7

    EBIT Margin (%) 16.0 16.9 17.7 -171 bps 17.7 -171 bps

    Other income 81.2 39.9 103.6 -21.6 64.8 25.3

    PBT 478.0 462.5 484.8 -1.4 504.2 -5.2

    Tax paid 122.5 117.9 123.6 -0.9 125.5 -2.4

    PAT 355.5 344.6 361.2 -1.6 378.7 -6.1The decline in PAT was due to poor performance at operating

    level

    Key Metrics

    Closing employees 29,347 29,500 25,150 16.7 28,169 4.2

    Attrition (%) 18.3 18.3 15.1 320 bps 17.5 80 bps Attrition still high, expected to come down

    Utilisation (%) (ex-trainees) 81.3 81.1 81.2 10 bps 81.1 20 bps

    Average $/| 69.7 69.5 67.4 3.4 70.3 -0.8

    Source: Company, ICICI Direct Research

    Exhibit 2: Change in estimates

    (| Crore) Old New % Change Old New % Change Comments

    Revenue 10,870 10,321 -5.1 12,573 11,780 -6.3Client specific issues and currency prompt us to revise our

    revenues estimates downwards

    EBITDA 2,132 1,921 -9.9 2,422 2,204 -9.0

    EBITDA Margin (%) 19.6 18.6 -100 bps 19.3 18.7 -55 bpsRevise EBITDA margin downwards led by peaking of utilisation and

    other cost pressures

    PAT 1,643 1,459 -11.2 1,863 1,681 -9.8

    EPS (|) 94.6 84.1 -11.2 107.3 96.8 -9.8

    FY20E FY21E

    Source: Company, ICICI Direct Research

  • ICICI Securities | Retail Research 3

    ICICI Direct Research

    Result Update | Larsen & Toubro Infotech

    Conference Call Highlights

    FY20E outlook: The management indicated that FY20E growth will be impacted by account specific challenges. They indicated that apart from

    challenges in top account, it will also be impacted by spending

    slowdown in one of its African banking client and 1% impact from

    project ramp down in high-tech, media & entertainment segment.

    Hence, the management believes growth will be more back ended

    mainly led by large deal pipeline, bottoming out of slowdown related

    challenges in BFS vertical and improving digital growth

    Digital business: Digital business, now constituting 39% of revenues, witnessed growth of 3.4% QoQ and 27.5% YoY in the quarter

    Deal wins: The company won one large deal in Q1 in insurance with net-new TCV of US$44 million. The company also highlighted four pillars

    for its growth strategy i.e. 1) focus on large accounts, 2) invest in new

    accounts, 3) open new accounts and 4) push for large deals. The

    company believes this will help regain its growth. Further, we believe

    the company continues to invest in S&M and has a very focused

    marketing strategy that will help regain lost growth of FY20E in FY21E

    Clientele update: Top client, which constitutes ~15% to revenue has possibly declined in revenue due to a cut in client technology spending

    and challenges in top client that resulted in subdued growth in banking

    & financial services. Besides top account, there are challenges in African

    banking account and ramp down in high-tech, media & entertainment

    segment. Further, certain clients in India are entering stabilisation phase

    which could impact revenue growth. As a result, revenues from top five

    and top 10 clients which has declined 2.1% QoQ and 3.5% QoQ. The

    company has won large deal in BFS and insurance vertical in previous

    quarters which will help in boosting revenue growth. Further the

    company highlighted that they have not lost any wallet share in existing

    clients which also gives us confidence that the company will recoup

    growth once spending improves

    Employee details: The company added 1,178 employees in Q1FY20 taking total employees to 29,347. LTI’s attrition has also increased 80

    bps to 18.3% which we believe is a cause of concern. As we believe

    increasing attrition has a cost impact with it and also at times delays

    growth

  • ICICI Securities | Retail Research 4

    ICICI Direct Research

    Result Update | Larsen & Toubro Infotech

    Key Metrics

    Exhibit 3: Geography wise split up

    Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20

    Revenue by geography (%)

    North America 66.0 66.6 67.4 66.8 66.4 68.7

    Europe 18.6 17.9 17.1 16.7 16.4 16.0

    India 8.0 6.4 6.4 7.8 8.2 6.9

    ROW 7.4 9.1 9.2 8.8 9.1 8.5

    Growth QoQ (%)

    North America 3.2 4.5 3.9 4.7 1.4 4.3

    Europe 8.8 -0.4 -1.9 3.1 0.2 -1.7

    India 0.3 -17.2 2.7 28.7 7.2 -15.2

    ROW 21.7 27.3 3.8 1.0 5.5 -5.9

    Source: Company, ICICI Direct Research

    Exhibit 4: Vertical wise split up

    Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20

    Revenue by vertical (%)

    BFS 28.7 30.9 29.9 29.1 27.7 27.7

    Insurance 18.3 18.2 17.9 17.8 17.8 18.1

    Manufacturing 17.3 15.7 15.4 15.6 16.6 15.2

    Energy &Utilities 11.5 10.1 10.7 10.8 11.0 10.7

    CPG,Retail&Pharma 9.0 9.1 10.2 10.6 10.6 11.1

    HTME 10.6 11.3 11.2 11.3 12.4 12.5

    Others 4.6 4.5 4.7 4.6 3.9 4.6

    Growth QoQ (%)

    BFS 11.5 11.5 -0.6 2.8 -2.9 0.8

    Insurance -0.7 3.0 1.0 5.0 2.0 2.5

    Manufacturing 5.9 -6.0 0.7 7.0 8.5 -7.7

    Energy & Utilities 2.6 -9.1 8.8 6.6 3.9 -2.0

    CPG, Retail & Pharma 3.0 4.7 15.1 9.7 2.0 5.5

    High-Tech, Media &

    Entertainment

    5.3 10.4 1.8 6.5 11.9 1.6

    Others 5.3 1.3 7.3 3.4 -13.5 18.8

    Source: Company, ICICI Direct Research; HTME: High-Tech, Media & Entertainment

    Exhibit 5: Service offering wise split up

    Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20

    Revenue by service offering (%)

    ADM* 32.8 42.1 32.0 30.8 37.9 38.1

    Enterprise Solutions 27.0 26.3 25.2 27.8 29.2 28.4

    IMS 11.7 11.5 11.7 11.4 11.0 10.9

    Analytics, AI & Cognitive 10.7 10.3 12.2 11.3 10.7 11.2

    EIM 6.5 6.5 8.0 7.6 8.0 8.2

    Platform Solutions 3.1 3.1 3.0 3.2 3.2 3.1

    Growth QoQ (%)

    ADM 3.1 32.9 -21.9 1.6 25.5 1.3

    Enterprise Solutions 7.7 0.8 -1.6 16.5 7.1 -2.0

    IMS 14.1 1.8 4.5 2.9 -1.6 -0.2

    Analytics, AI & Cognitive 4.3 -0.3 21.6 -2.2 -3.4 5.5

    EIM 2.1 3.5 26.4 0.3 7.4 3.3

    Platform Solutions -6.8 3.5 -0.6 12.6 2.0 -2.4

    Source: Company, ICICI Direct Research; *ADM: Application Development Maintenance is now combined with testing hence

    certain quarters are not comparable, IMS: Infrastructure Management Services, EIM: Enterprise Integration & Mobility

    Among geography, revenue growth was led by

    North America due to acquisition. Revenues in India

    region was impacted due to absence of pass through

    revenues

    BFS growth was muted mainly on the back of cut in

    technology spends by top client. This was partially

    offset by large deal won in Nordics. Manufacturing

    and E&U vertical was impacted by absence of pass

    through revenues

    Decline in Enterprise and Platform solution dented

    revenue growth

  • ICICI Securities | Retail Research 5

    ICICI Direct Research

    Result Update | Larsen & Toubro Infotech

    Exhibit 6: Client & human resource matrix

    Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20

    Client metrics

    5 Million dollar + 44 42 44 47 49 49

    20 Million dollar + 13 13 14 15 17 19

    50 Million dollar + 4 4 4 5 5 5

    100 Million dollar + 1 1 1 1 1 1

    Headcount, Utilization & Attrition

    Employee count 24139 25150 26414 27513 28169 29347

    Utilization (ex-trainees) 81.1 81.2 82.3 83.0 81.1 81.3

    Attrition LTM 14.8 15.1 15.3 16.5 17.5 18.3

    Source: Company, ICICI Direct Research

    Increase in attrition is a concern

  • ICICI Securities | Retail Research 6

    ICICI Direct Research

    Result Update | Larsen & Toubro Infotech

    Financial story in charts

    Exhibit 7: Dollar revenues may grow at 12.1 % CAGR in FY19-21E

    810887

    970

    1132

    320 329 347 354

    1349

    357

    1485

    1695

    -1%

    10%9%

    17%

    23%21%

    18%

    14%

    19%

    11%10%

    14%

    -5%

    0%

    5%

    10%

    15%

    20%

    25%

    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

    1800

    FY15

    FY16

    FY17

    FY18

    Q1FY19

    Q2FY19

    Q3FY19

    Q4FY19

    FY19

    Q1FY20

    FY20E

    FY21E

    (%)

    ($ mliion)

    Dollar revenue Growth, YoY

    Source: Company, ICICI Direct Research

    Exhibit 8: Revise our margin estimates downwards

    20.2

    17.5

    18.9

    16.3

    19.4

    20.5 20.6

    19.2

    19.9

    18.4 18.618.7

    12.0

    14.0

    16.0

    18.0

    20.0

    22.0

    FY15

    FY16

    FY17

    FY18

    Q1FY19

    Q2FY19

    Q3FY19

    Q4FY19

    FY19

    Q1FY20

    FY20E

    FY21E

    (%)

    EBITDA Margin

    Source: Company, ICICI Direct Research

    Exhibit 9: PAT trend

    Source: Company, ICICI Direct Research

    761837

    971 1113

    361400 376 379

    1516

    356

    1459

    1681

    7.3%9.9%

    16.1% 14.5%

    35%

    47%

    33%31%

    36.2%

    -2%-3.7%

    15.2%

    -10.0%

    0.0%

    10.0%

    20.0%

    30.0%

    40.0%

    50.0%

    200

    600

    1000

    1400

    1800

    FY15

    FY16

    FY17

    FY18

    Q1FY19

    Q2FY19

    Q3FY19

    Q4FY19

    FY19

    Q1FY20

    FY20E

    FY21E

    (%)

    (| crore)

    Adjusted PAT Growth, YoY

  • ICICI Securities | Retail Research 7

    ICICI Direct Research

    Result Update | Larsen & Toubro Infotech

    Exhibit 10: One year forward rolling PE

    100

    700

    1,300

    1,900

    2,500

    3,100

    Jul-16

    Dec-16

    May-17

    Oct-17

    Mar-18

    Aug-18

    Jan-19

    Jun-19

    (|)

    Price 10x 15x 20x 25x 30x

    Source: Company, ICICI Direct Research

  • ICICI Securities | Retail Research 8

    ICICI Direct Research

    Result Update | Larsen & Toubro Infotech

    Exhibit 11: Recommendation History* vs. Consensus

    80.0

    100.0

    0

    500

    1,000

    1,500

    2,000

    2,500

    Jul-19May-

    19

    Apr-

    19

    Feb-

    19

    Jan-

    19

    Nov-

    18

    Oct-

    18

    Aug-

    18

    Jun-

    18

    May-

    18

    Mar-

    18

    Feb-

    18

    Dec-

    17

    Nov-

    17

    Sep-

    17

    Aug-

    17

    Jun-

    17

    May-

    17

    Mar-

    17

    Jan-

    17

    Dec-

    16

    Oct-

    16

    (%

    )

    (|)

    Price Idirect target Consensus Target Mean % Consensus with BUY

    Source: Bloomberg, Company, ICICI Direct Research,* listed in July 2016

    Exhibit 12: Top 10 Shareholders

    Rank Name Latest Filing Date% O/S Position (m) Change (m)

    1 Larsen & Toubro Ltd 31-Mar-19 74.8% 129.8 0.0

    2 Naik (Anilkumar Manibhai) 31-Mar-19 1.2% 2.1 0.0

    3 UTI Asset Management Co. Ltd. 31-Mar-19 1.1% 1.9 0.0

    4 ChrysCapital Advisors LLP 31-Mar-19 1.0% 1.8 0.0

    5 Motilal Oswal Asset Management Company Ltd. 31-May-19 1.0% 1.7 -0.1

    6 HDFC Asset Management Co., Ltd. 31-May-19 0.9% 1.6 0.0

    7 Goldman Sachs Asset Management International 31-May-19 0.8% 1.3 0.0

    8 DSP Investment Managers Pvt. Ltd. 31-May-19 0.7% 1.3 0.0

    9 ICICI Prudential Asset Management Co. Ltd. 30-Jun-19 0.7% 1.1 -0.2

    10 The Vanguard Group, Inc. 31-May-19 0.5% 0.9 0.0

    Source: Reuters, ICICI Direct Research

    Exhibit 13: Recent Activity

    Investor name Value Shares Investor name Value Shares

    Matthews International Capital Management, L.L.C. 7.85m 0.32m BlackRock Institutional Trust Company, N.A. -7.77m -0.31m

    Mirae Asset Global Investments (India) Pvt. Ltd. 4.03m 0.16m ICICI Prudential Asset Management Co. Ltd. -6.44m -0.24m

    Capital Investment Trust Corporation 1.96m 0.08m Baroda Asset Management India Ltd -4.89m -0.18m

    Ankalikar (Arvind) 1.91m 0.08m Florida State Board of Administration -2.29m -0.09m

    Manulife Asset Management (Asia) 1.58m 0.06m Calamos Advisors LLC -2.20m -0.09m

    Buys Sells

    Source: Reuters, ICICI Direct Research

    Exhibit 14: Shareholding Pattern

    Shareholder Dec-18 Mar-19 Jun-19

    Promoter 74.8 74.8 74.8

    Public 25.2 25.2 25.2

    Total 100.0 100.0 100.0

    Source: Company, ICICI Direct Research

  • ICICI Securities | Retail Research 9

    ICICI Direct Research

    Result Update | Larsen & Toubro Infotech

    Financial summary

    Exhibit 15: Profit and loss statement | crore

    (Year-end March) FY18 FY19 FY20E FY21E

    Total Revenues 7,306 9,446 10,321 11,780

    Growth (%) 12.4 29.3 9.3 14.1

    Employee costs 4,376 6,164 6,274 7,172

    Total Operating Expenditure 6,119 7,562 8,399 9,575

    EBITDA 1,188 1,883 1,921 2,204

    Growth (%) (3.5) 58.6 2.0 14.7

    Depreciation & Amortization 156 147 237 247

    Other Income 410 292 275 314

    Interest - - - -

    PBT before Exceptional Items 1,442 2,028 1,959 2,271

    Growth (%) 16.6 40.7 (3.4) 15.9

    Tax 329 512 499 590

    PAT before Exceptional Items 1,113 1,516 1,459 1,681

    PAT 1,113 1,516 1,459 1,681

    Growth (%) 14.5 36.2 (3.7) 15.2

    Diluted EPS 64.7 87.3 84.1 96.8

    EPS (Growth %) 13.6 35.0 (3.7) 15.2

    Source: Company, ICICI Direct Research

    Exhibit 16: Cash flow statement | crore

    (Year-end March) FY18 FY19 FY20E FY21E

    PBT 1,442 2,028 1,959 2,271

    Add: Depreciation 156 147 237 247

    (Inc)/Dec in current assets (576) (543) (169) (282)

    Inc/(Dec) in current liabilities 200 237 11 19

    CF from operations 844 1,395 1,405 1,605

    (Inc)/dec in other investments (250) (377) (578) (543)

    (Inc)/dec in Fixed Assets (98) (153) (175) (165)

    Other investing cash flow 2 2 2 7

    CF from investing Activities (461) (744) (751) (701)

    Issue of equity 0 0 - -

    Inc/(dec) in loan funds (41) (59) 0 -

    Dividend paid & dividend tax (353) (534) (550) (592)

    Others (14) (2) - -

    CF from Financial Activities (408) (594) (550) (592)

    Net cash flow (24) 57 104 311

    Effect of exchange rate changes 8 (5) - -

    Opening cash 380 363 415 519

    Closing cash 363 415 519 830

    *calculated; Source: Company, ICICI Direct Research

    Exhibit 17: Balance sheet | crore

    (Year-end March) FY17 FY18 FY19 FY20E FY21E

    Liabilities

    Equity 17 17 17 17

    Reserves & Surplus 3,843 4,876 5,786 6,874

    Networth 3,860 4,894 5,803 6,891

    Long term Liabilties & provisions 145 128 140 159

    Total Debt - - - -

    Source of funds 4,006 5,023 5,944 7,051

    Assets

    Net fixed assets 252 308 281 243

    Net intangible assets 159 138 104 59

    Goodwill 276 495 495 495

    Other non current assets 501 558 609 664

    Unbilled revenue 837 558 610 696

    Debtors 1,396 1,826 1,995 2,278

    Current Investments 1,264 1,740 2,440 3,140

    Cash & Cash equivalents 363 415 519 830

    Other current assets 334 630 689 739

    Trade payables 389 467 510 582

    Current liabilities 987 1,179 1,289 1,512

    Application of funds 4,006 5,023 5,944 7,051

    Source: Company, ICICI Direct Research

    Exhibit 18: Key ratios | crore

    (Year-end March) FY18 FY19 FY20E FY21E

    Per share data (|)

    EPS 64.7 87.3 84.1 96.8

    Cash Per Share 21.1 23.9 30.0 47.9

    BV 224.4 281.9 334.3 397.0

    DPS 21.5 28.1 27.0 29.1

    Operating Ratios (%)

    EBITDA Margin 16.3 19.9 18.6 18.7

    PBT Margin 19.7 21.5 19.0 19.3

    PAT Margin 15.2 16.0 14.1 14.3

    Turnover Ratios

    Debtor days 70 71 71 71

    Creditor days 19 18 18 18

    Return Ratios (%)

    RoE 28.8 31.0 25.1 24.4

    RoCE 36.0 40.4 33.0 32.2

    RoIC 43.4 60.5 56.4 63.5

    Valuation Ratios (x)

    P/E 23.4 17.4 18.0 15.6

    EV / EBITDA 20.8 12.8 12.1 10.1

    Market Cap / Sales 3.6 2.8 2.5 2.2

    Solvency Ratios

    Current Ratio 1.9 1.8 1.8 1.8

    Quick Ratio 1.3 1.5 1.5 1.4

    Source: Company, ICICI Direct Research

  • ICICI Securities | Retail Research 10

    ICICI Direct Research Result Update | Larsen & Toubro Infotech

    Exhibit 19: ICICI Direct coverage universe (IT)

    CMP M Cap

    (|) TP(|) Rating (| Cr) FY18 FY19 FY20E FY18 FY19 FY20E FY18 FY19 FY20E FY18 FY19 FY20E FY18 FY19 FY20E

    Cyient (INFENT) 477 475 Hold 5,371 36.0 42.4 38.6 13.3 11.3 12.4 8.2 7.3 7.2 21.4 21.4 17.7 17.3 18.7 15.2

    Eclerx (ECLSER) 637 860Reduce 3,532 72.9 60.0 63.1 12.7 15.5 14.7 8.0 9.1 9.2 28.2 21.5 24.8 24.1 16.5 18.9

    Firstsource (FIRSOU) 51 60 Buy 3,502 4.8 5.4 5.9 10.7 9.4 8.6 8.8 7.2 6.2 13.0 14.0 15.7 13.9 13.9 13.8

    HCL Tech (HCLTEC) 1,019 1,190 Hold 146,833 62.6 74.7 76.7 17.3 14.5 14.1 12.5 10.1 9.1 27.4 26.5 26.0 23.8 24.5 22.5

    Infosys (INFTEC) 785 845 Hold 335,118 32.3 35.4 39.4 23.8 21.7 19.5 16.2 14.8 13.0 30.9 32.9 32.8 22.5 23.7 24.3MindTree (MINCON) 671 635Reduce 11,313 34.3 45.9 37.7 20.1 15.0 18.3 14.3 9.7 10.0 24.9 29.8 24.4 20.8 22.8 17.0

    L&T Intotech (LTINFO) 1,520 1,710 Hold 26,301 64.7 87.3 84.1 23.4 17.4 18.0 20.8 12.8 12.1 36.0 40.4 33.0 28.8 31.0 25.1

    NIIT Tech (NIITEC) 1,345 1,395 Hold 7,677 45.6 65.7 76.1 27.8 19.0 16.7 13.8 10.4 8.9 19.4 24.2 24.3 15.8 19.9 20.2

    Persistent (PSYS) 577 650 Hold 5,119 40.5 44.0 48.7 15.8 14.6 13.2 9.1 7.1 6.4 19.8 20.5 20.5 15.2 15.0 14.9

    TCS (TCS) 2,077 2,080 Hold 790,125 67.4 83.8 88.8 31.2 25.0 23.7 23.0 18.9 17.2 37.6 43.8 43.2 29.6 34.4 33.9

    Tech M (TECMAH) 675 845 Hold 67,723 42.8 47.7 51.4 17.6 15.8 14.6 13.4 9.5 8.2 21.5 23.6 23.2 20.2 21.2 19.8

    Wipro (WIPRO) 265 315 Buy 160,796 12.7 14.9 16.4 21.1 17.9 16.2 13.8 11.1 10.0 16.9 17.8 17.3 16.6 15.8 15.9

    EV/EBITDA (x)P/E (x)

    Sector / Company

    RoE (%)RoCE (%)EPS (|)

    Source: Company, ICICI Direct Research

  • ICICI Securities | Retail Research 11

    ICICI Direct Research

    Result Update | Larsen & Toubro Infotech

    RATING RATIONALE

    ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its

    stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,

    Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined

    as the analysts' valuation for a stock

    Buy: >15%

    Hold: -5% to 15%;

    Reduce: -15% to -5%;

    Sell:

  • ICICI Securities | Retail Research 12

    ICICI Direct Research

    Result Update | Larsen & Toubro Infotech

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