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Page 1: Larsen & Toubro Infotech LTINFO)content.icicidirect.com/mailimages/IDirect_LTInfo_Q1FY20.pdf · Larsen & Toubro Infotech LTINFO) ... However, LTI has a knack of winning large deals

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]

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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

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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

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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

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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

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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 18.6 18.7

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

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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

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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

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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

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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 24.3

MindTree (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

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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: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]

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ANALYST CERTIFICATION

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subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned

Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.

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