Result-Analysis-Elite-Wealth

Result-Analysis

Result Analysis: Larsen & Toubro Infotech Ltd. Result Update Q2FY22
Particulars (In Rs. Cr.) Q2FY22 Q1FY22 Q2FY21 QoQ % YoY%
Revenue from Operations 3767 3,463 2998.4 8.79% 25.63%
Other Income 111.2 121.6 36.7 -8.55% 203.00%
Total Income 3878.2 3584.1 3035.1 3.35% 18.53%
Employee Benefit Expenses 2369.2 2208.2 1780.3 7.29% 33.08%
Employee benefit Expenses as % of Sales 62.89% 63.77% 59.38% -88 351
EBIT 759.4 689.8 632.3 10.09% 20.10%
EBIT Margin 20.16% 19.92% 21.09% 24 -93
Profit After Tax 551.7 496.8 456.8 11.05% 20.77%
PATM (%) 14.23% 20.71% 18.01% -648 -378
EPS (in Rs. ) 31.41 28.27 25.95 11.11% 21.04%
Segment Revenue Q2FY22 Q1FY22 Q2FY21 QoQ % YoY%
BFSI 1,758 1,612 1,378 9.07% 27.59%
Manufacturing 587 520 485 12.85% 20.87%
Energy & Utilities 336 315 318 6.76% 5.89%
Hi- Tech, Media & Entertainment 471 440 317 7.00% 48.45%
CPG, Retail, Pharma & Others 615 576 500 6.84% 22.94%

Result Highlight: 

  • LTI Consolidated Revenue rose 8.8% QoQ and 25.6% YoY to Rs 3767 crore – higher than the estimates of Rs. 3677 Crore

  • Consolidated PAT rose 11.12% QoQ and 21.05% YoY to Rs 551.5 crore – higher than the estimates of Rs. 533.5 Crore. Reported strong Cash from Operations at Rs. 598.4 Cr. which is 109% of Net Profit.

  • Attrition increased to 19.6% (up 440bps QoQ).

  • All verticals showed good sequential as well as YoY & QoQ growth. BFSI contribute 46.67% to the total revenue of the company.

  • LTI added one/three/five new clients in the over USD50m/USD20m/USD10m bracket in 2QFY22. Total active clients increased to 463 (v/s 438 in 1QFY22).

  • In terms of geography, growth was broad based with core geographies – North America and Europe – growing 9.1% and 7.5% QoQ CC.

  • Headcount increased by 4,084 to 42,382 in 2QFY22.

  • The company approved an interim dividend of Rs 15 per share. 

Management commentary: 

  • Management said growth in 2QFY22 could have been higher if supply-side issues were not present. H2Q22 is seasonally strong for LTI and seasonality is expected to continue in FY22.

  • Company is looking to hire 5500 freshers in FY22 (v/s its previous target of 4,500 freshers). It is also looking to hire 1000 employees, with 1-2 years of experience.

Conference Call Highlights 

  • Guidance: Management maintained its PAT margin guidance in the 14-15% range. Claimed that the growth momentum to sustain for at least three years from now.

  • LTI reported an EBIT margin of 17.2% (+80bp QoQ) in 2QFY22 due to 70bps of SG&A leverage was offset by 70bps of margin drop due to utilization. Tailwinds from higher working days and offshore mix was partly offset by higher employee cost.

  • Billed DSO stood at 61 days (vs 60 days in 1Q21).

  • The industry is witnessing a sharp increase in attrition, particularly in the 3-6 year experience bracket. This is primarily because of a bounce back in demand and lack of industrywide fresher hiring in the past 3-4 years.

Outlook:

Larsen & Toubro Infotech Limited (LTI) reported revenue above the Street expectations in the quarter ended September 2021. Growth was broad-based across verticals and geographies. Historically H2 has been seasonally strong and same trend is expected to continue in H2FY22. Management is confident of top-quartile revenue performance and delivering at least USD2bn revenue in FY22 on strong demand, deal pipeline and good progress on client mining. LTI won one new large deal in Europe with TCV of $30mn for 5 years. LTI has stable DSO and robust cash flow.  At the CMP of Rs. 6800, LTI is trading at PE multiple of 53.35x.  Valuing the company at 39.1x FY23E EPS, we recommend accumulate in the range of Rs 6700- Rs 6750 for the Target Price of Rs.7720.

Disclosure in pursuance of Section 19 of SEBI (RA) Regulation 2014

Elite Wealth Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only information in making their investment decision and must exercise their own judgment before making any investment decision.
For analyst certification and other important disclosures, see the Disclosure Appendix, or go to www.elitewealth.in. Analysts employed by Elite Wealth Limited are registered/qualified as research analysts with SEBI in India.( SEBI Registration No.: INH100002300)
Disclosure Appendix
Analyst Certification (For Reports)
Israil Khan, Elite Wealth Limited, suhail@elitewealth.in
The analyst(s) certify that all of the views expressed in this report accurately reflect my/our personal views about the subject company or companies and its or their securities. I/We also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Elite Wealth Limited.
As to each individual report referenced herein, the primary research analyst(s) named within the report individually certify, with respect to each security or issuer that the analyst covered in the report, that:
(1) all of the views expressed in the report accurately reflect his or her personal views about any and all of the subject securities or issuers; and
(2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in the report.
For individual analyst certifications, please refer to the disclosure section at the end of the attached individual notes.
Research Excerpts
This note may include excerpts from previously published research. For access to the full reports, including analyst certification and important disclosures, investment thesis, valuation methodology, and risks to rating and price targets, please visit www.elitewealth.in.
Company-Specific Disclosures
Important disclosures, including price charts, are available and all Elite Wealth Limited covered companies by visiting https://www.elitewealth.in, or emailing research@elitestock.com with your request. Elite Wealth Limited may screen companies based on Strategy, Technical, and Quantitative Research. For important disclosures for these companies, please e-mail research@elitestock.com.
Options related research:
If the information contained herein regards options related research, such information is available only to persons who have received the proper option risk disclosure documents. For a copy of the risk disclosure documents, please contact your Broker’s Representative or visit the OCC’s website at https://www.elitewealth.in
Other Disclosures
All research reports made available to clients are simultaneously available on our client websites. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your respective broker’s sales person.
Ownership and material conflicts of interest Disclosure
Elite Wealth Limited policy prohibits its analysts, professionals reporting to analysts from owning securities of any company in the analyst’s area of coverage. Analyst compensation: Analysts are salary based permanent employees of Elite Wealth Limited. Analyst as officer or director: Elite Wealth Limited policy prohibits its analysts, persons reporting to analysts from serving as an officer, director, board member or employee of any company in the analyst’s area of coverage.
Country Specific Disclosures
India – For private circulation only, not for sale.
Legal Entities Disclosures
Mr. Ravinder Parkash Seth is the Managing Director of Elite Wealth Ltd (EWL, henceforth), having its registered office at Casa Picasso, Golf Course Extension, Near Rajesh Pilot Chowk, Radha Swami, Sector-61, Gurgaon-122001 Haryana, is a SEBI registered Research Analyst and is regulated by Securities and Exchange Board of India. Telephone:011-43035555, Facsimile: 011-22795783 and Website: www.elitewealth.in
EWL discloses all material information about itself including its business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and such other information as is necessary to take an investment decision, including the following:
1. Reports
a) EWL or his associate or his relative has no financial interest in the subject company and the nature of such financial interest;
(b) EWL or its associates or relatives, have no actual/beneficial ownership of one per cent. or more in the securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance;
(c) EWL or its associate or his relative, has no other material conflict of interest at the time of publication of the research report or at the time of public appearance;
2. Compensation
(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
(b) EWL or its associates have not managed or co-managed public offering of securities for the subject company in the past twelve months;
(c) EWL or its associates have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
(d) EWL or its associates have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
(e) EWL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report.
3 In respect of Public Appearances
(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
(b) The subject company is not now or never a client during twelve months preceding the date of distribution of the research report and the types of services provided by EWL

 

FILING COMPLAINTS ON SCORES - EASY & QUICK

a. Register on SCORES portal

b. Mandatory details for filing complaints on SCORES:
i. Name, PAN, Address, Mobile Number, E-mail ID

c. Benefits:
i. Effective communication
ii. Speedy redressal of the grievances

SEBI : https://www.scores.gov.in/scores/complaintRegister.html