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Axis Securities
L&T Infotech (Hold)
Target: ₹2,460
CMP: ₹2,262.60
L&T Infotech (LTI) has reported a healthy set of results in Q1 FY21. Revenue declined 4.8 per cent QoQ in constant currency terms much in line with the expectations at ₹2,949 crore. Operating profit showed a strong growth of 2.4 per cent QoQ at ₹592 crore. Operating margins also witnessed healthy growth of 90 bps QoQ and stood at 20.1 per cent aided mainly by strong execution, lower utilisation , depreciation of currency etc.
Lower foreign exchange income and higher tax expenses impacted the bottomline. Management is confident in the sustainable operating margins from hereon due to strong cost optimisation effort and strong execution efforts.
Deal pipeline remained softer as compared to previous quarters. LTI signed only one large deal with a bank in the UK and added 16 new clients in Q1-FY21. Management is confident in gaining the momentum from next quarter onwards on account of a healthy deal pipeline and ram up in new deal wins.
Majority of the verticals will see strong recovery and are likely to report growth from next quarter onwards backed by a strong deal pipeline in forthcoming quarters.
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