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Macquarie
L&T Infotech (Buy)
Target: ₹4,550
CMP: ₹3977.90
L&T Infotech has a structured sales program and a strong alliance partner ecosystem, which continues to help drive faster than industry growth. Success around winning new logos in the Fortune 500 (up from 52 in 2017 to 69 now) has been good.
The large deal pipeline remains strong for LTI at over 62 per cent y-o-y, with strong demand around cloud migration, digital transformation and changing customer experiences.
Recently won large deals (one in UAE and one in the energy vertical) totalling to US$274mn have increased net new deal wins in 9M FY21 to $338 million (+54 per cent y-o-y), putting it in a good shape to achieve 9.7-18.9 per cent y-o-y growth in US$ revenues in FY21-22E, positioning it in the industry leader quadrant (by growth). Ramp-up of UAE deal is likely in Q1-FY22.
We expect LTI to step up its investments in SG&A towards strategic investment areas like data, cloud and SaaS offerings in Nordics. We raise our FY21-23E EPS by 1-3%. With the stronger revenue growth outlook ,we raise our target price to ₹4,550 (30x FY23E EPS) vs ₹3,700 earlier.
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