May 5, 2019 1

Rating: BUY | CMP: Rs1,678 | TP: Rs1,981

Top client headwind to persist

LTI disappointed with soft organic growth of 0.8% CC with sharp decline in

margins also. LTI reported CC revenue growth of 1.9% QoQ of which 1.1%

was contributed by Nielsen+Partner and Ruletronics acquisitions. Weak

growth was on account of sharp revenue decline from the top client, which

belongs to the BFS vertical. EBIT margin declined by 140 bps QoQ to 17.7%

and was impacted by three factors i) 200 bps decline in utilization rate

impacting margin by 60 bps, ii) 60 bps impact due to investments in sales &

digital & (iii) 40 bps impact from appreciation of INR against USD. Revenues

from top five clients declined by 4.8% QoQ. LTI has announced 2 large new

deals with net TCV in excess of US$100mn. We believe weakness of top client

will weigh on the growth of FY20E. We cut our revenue estimates by ~2% in

FY20E & ~1% in FY21E. We cut our margins by 80bps & 30bps for FY20E &

FY21E to factor higher S&M spends & spike in attrition (+100bps QoQ to

17.5%) may lead to salary hike. Despite headwinds ahead in top client &

margins, we expect LTI to deliver revenue growth of 14% & 15% in FY20E &

FY21E respectively. We value LTI at 18X FY21E multiple at an EPS of Rs.93 &

Rs. 110 to arrive at a changed target price of Rs. 1981(earlier: Rs.2032).

Top account de-growth disappoints: LTI reported CC revenue growth of

1.9% QoQ of which 1.1% was contributed by Nielsen+Partner and Ruletronics

acquisitions. Weak growth was on account of sharp revenue decline from the

top client, which belongs to the BFS vertical. LTI reported 2% QoQ dollar

revenue growth at US$ 354mn (Ple: US$356mn). Revenues from top five

clients declined by 4.8% QoQ. Management mentioned the decline is mainly

due to its top client based in US geography

Higher utilization led to drop in margins: EBIT margin declined by 140 bps

QoQ to 17.7% and was impacted by three factors i) 200 bps decline in

utilization rate impacting margin by 60 bps, ii) 60 bps impact due to investments

in sales & digital & (iii) 40 bps impact from appreciation of INR against USD.

Rise in attrition by 100bps QoQ to 17.5% may lead to elevated salary hike in

coming quarters. Management have already highlighted in past at utilization is

not at sustainable range (~81%) may further come down. We cut our margins

by 80bps & 30bps for FY20E & FY21E to factor higher S&M spends & spike in

attrition may lead to salary hike.

Weak growth in BFS: Revenue decline from the top client showed in revenue

decline in the BFS vertical (-3% QoQ CC) and Analytics, AI & Cognitive offering

(-4.2% QoQ CC). Insurance showed a soft growth of 1.6% QoQ CC &

manufacturing & Hi Tech, Media & Entertainment showed a strong growth of

8% QoQ CC & 11.35 QoQ CC respectively.

Soft cash generation: OCF was at 81% of the net profit & was mainly

impacted by higher unbilled revenues. Receivables at 98 days was higher than

peers. We believe market share gains over the past years has led to CFO-PAT

ratio to be lower as compared to its peers.

Larsen & Toubro Infotech (LTI IN)

May 5, 2019

Q4FY19 Result Update

☑ Change in Estimates | ☑ Target | Reco

Change in Estimates

Current Previous

FY20E FY21E FY20E FY21E

Rating BUY BUY

Target Price 1,981 2,032

Sales (Rs. m) 108,295 125,041 110,426 126,643

% Chng. (1.9) (1.3)

EBITDA (Rs. m) 20,598 24,400 21,824 24,365

% Chng. (5.6) 0.1

EPS (Rs.) 94.1 112.1 98.7 111.8

% Chng. (4.7) 0.2

Key Financials

FY18 FY19 FY20E FY21E

Sales (Rs. bn) 73 94 108 125

EBITDA (Rs. bn) 13 19 21 24

Margin (%) 17.3 19.9 19.0 19.5

PAT (Rs. bn) 12 15 16 19

EPS (Rs.) 68.4 87.8 94.1 112.1

Gr. (%) 20.4 28.4 7.1 19.1

DPS (Rs.) 21.9 28.1 30.1 35.9

Yield (%) 1.3 1.7 1.8 2.1

RoE (%) 33.6 34.9 30.6 30.2

RoCE (%) 31.7 40.0 35.9 35.3

EV/Sales (x) 3.7 2.8 2.4 2.0

EV/EBITDA (x) 21.5 14.3 12.8 10.5

PE (x) 24.5 19.1 17.8 15.0

P/BV (x) 7.5 6.0 5.0 4.1

Key Data LRTI.BO | LTI IN

52-W High / Low Rs.1,990 / Rs.1,437

Sensex / Nifty 38,963 / 11,712

Market Cap Rs.291bn/ $ 4,201m

Shares Outstanding 174m

3M Avg. Daily Value Rs.568.56m

Shareholding Pattern (%)

Promoter’s 74.84

Foreign 7.84

Domestic Institution 7.38

Public & Others 9.94

Promoter Pledge (Rs bn) -

Stock Performance (%)

1M 6M 12M

Absolute (1.5) (1.5) 12.5

Relative (1.7) (11.5) 1.4

Aniket Pande

aniketpande@plindia.com | 91-22-66322300

Rajat Gandhi

rajatgandhi@plindia.com | 91-22-66322246

Larsen & Toubro Infotech

May 5, 2019 2

Q4FY19: Quick view on results

Y/e March (Rs mn) 4QFY19 3QFY19 QoQ gr. 4QFY18 YoY gr. Ple Variance

(Actual vs Ple)

Revenues (USD mn) 354 347 2.0% 309 14.5% 356 -0.5%

Revenues (INR mn) 24,860 24,729 0.5% 20,012 24.2% 24,890 -0.1%

EBITDA (INR mn) 4,765 5,090 -6.4% 3,536 34.8% 4,829 -1.3%

EBITDA Margins (%) 19.2 20.6 -142bp 17.7 150bp 19.4 -23bp

EBIT (INR mn) 4,394 4,735 -7.2% 3,176 38.4% 4,455 -1.4%

EBIT Margins (%) 17.7 19.1 -147bp 15.9 180bp 17.9 -23bp

PAT (INR mn) 3,787 3,755 0.9% 2,893 30.9% 3,643 4.0%

EPS 22 22 0.9% 17 31.5% 21 4.0%

Source: Company, PL

Top client led to revenue drag

232 240 245 254 259 271294

309 320 329347 354

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

0

50

100

150

200

250

300

350

400

Q1F

Y17

Q2F

Y17

Q3F

Y17

Q4F

Y17

Q1F

Y18

Q2F

Y18

Q3F

Y18

Q4F

Y18

Q1F

Y19

Q2F

Y19

Q3F

Y19

Q4F

Y19

USD Revenue Growth (Mn) Growth QoQ (%)

Source: Company, PL

Pressure on EBITDA margins due to drop in utilizations

19.6%19.0%

18.1%

19.0%

16.8% 16.8%17.1%

17.7%

19.4%

20.5% 20.6%

19.2%

15.0%

16.0%

17.0%

18.0%

19.0%

20.0%

21.0%

Q1F

Y17

Q2F

Y17

Q3F

Y17

Q4F

Y17

Q1F

Y18

Q2F

Y18

Q3F

Y18

Q4F

Y18

Q1F

Y19

Q2F

Y19

Q3F

Y19

Q4F

Y19

EBITDA Margin %

Source: Company, PL

Revenue decline from the top client

showed in revenue decline in the BFS

vertical (-3% QoQ CC) and Analytics,

AI & Cognitive offering (-4.2% QoQ

CC).

We cut our margins by 80bps &

30bps for FY20E & FY21E to factor

higher S&M spends & spike in

attrition (+100bps QoQ to 17.5%)

may lead to salary hike.

Larsen & Toubro Infotech

May 5, 2019 3

Key Highlights of Conference Call:

Growth was tepid during the quarter because of tightness in spending of budget

in top clients led by change in leadership & restructuring which will continue in

Q1FY20 as well.

Management cited that they are having strong relationship with client and this

is temporary challenge and remain confident of recovering from Q2FY20.

Margin was lower during the quarter with headwind from lower utilization,

continuous investments and rupee appreciation.

Two large deals won in Q4 with cumulative net-new TCV in excess of US$100

million in Insurance and manufacturing vertical. Ramp up of this deals will start

in Q2FY20 with full pickup in Q3 & Q4FY20.

Utilization was lower during the quarter and management cited it is comfortable

at this level. Attrition was higher during the quarter and management guided to

reduce it with increase in employee engagement by creating upskilling

environment apart from wage hike.

Digital (38% of revenues) continues to remains the key growth driver and

company will focus on strengthening in digital and mining top clients for growth.

Investments in platforms that service as building block for clients in consisting

delivering performance and client centricity is appreciated by the clients.

Management remain confident on growth outlook with strong demand

environment.

Strategy is to focus on capability driven acquisitions.

Apart from client specific issue in BFS vertical management remain confident

on growth outlook in this vertical with steady demand environment.

Due to change in Ind AS policy, treatment of lease expenses will be under

depreciation & finance charges, will help in improvement of EBITDA margins

upto 40bps however will impact on PAT margin with a dip of upto 30bps.

India business and ROW contributed

52% to the current quarter’s

incremental revenues. March is a

seasonally strong quarter for India

business.

Two large deals won in Q4 with

cumulative net-new TCV in excess of

US$100 million in Insurance and

manufacturing vertical. Ramp up of

this deals will start in Q2FY20 with full

pickup in Q3 & Q4FY20.

Larsen & Toubro Infotech

May 5, 2019 4

Investments in digital making SG&A expenses go higher

15%16% 16%

17% 17% 17%16% 16% 16%

15% 14%15%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

8%

10%

12%

14%

16%

18%

Q1F

Y17

Q2F

Y17

Q3F

Y17

Q4F

Y17

Q1F

Y18

Q2F

Y18

Q3F

Y18

Q4F

Y18

Q1F

Y19

Q2F

Y19

Q3F

Y19

Q4F

Y19

SG&A Exp EBITDA Margin %

Source: Company, PL

Utilizations came at sustainable level

77.4%

78.7%78.1% 78.3%

77.7%

79.6%80.3%

79.9% 79.7%80.4%

82.1%

80.1%78.0%

80.6% 80.5%

79.3%

78.2%

80.7%81.5%

81.1% 81.2%

82.3%83.0%

81.1%

74.0%

76.0%

78.0%

80.0%

82.0%

84.0%

Q1F

Y17

Q2F

Y17

Q3F

Y17

Q4F

Y17

Q1F

Y18

Q2F

Y18

Q3F

Y18

Q4F

Y18

Q1F

Y19

Q2F

Y19

Q3F

Y19

Q4F

Y19

Utilization Including Trainess Utilization excluding Trainess

Source: Company, PL

Rising Attrition causing concern

19.5%

18.5%18.1%

16.9%

14.7% 15.0%14.6% 14.8% 15.1% 15.3%

16.5%

17.5%

12.0%

14.0%

16.0%

18.0%

20.0%

Q1F

Y17

Q2F

Y17

Q3F

Y17

Q4F

Y17

Q1F

Y18

Q2F

Y18

Q3F

Y18

Q4F

Y18

Q1F

Y19

Q2F

Y19

Q3F

Y19

Q4F

Y19

Attrition % (LTM)

Source: Company, PL

Management have already

highlighted in past at utilization is not

at sustainable range (~81%) may

further come down.

Rise in attrition by 100bps QoQ to

17.5% may lead to elevated salary

hike in coming quarters

Larsen & Toubro Infotech

May 5, 2019 5

BFSI vertical drags the growth in the quarter

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Q1F

Y17

Q2F

Y17

Q3F

Y17

Q4F

Y17

Q1F

Y18

Q2F

Y18

Q3F

Y18

Q4F

Y18

Q1F

Y19

Q2F

Y19

Q3F

Y19

Q4F

Y19

USD Revenue Growth QoQ (%) BFSI Revenues Growth QoQ (%)

Source: Company, PL

Geography-wise revenues

Geography Revenues (USD mn) 4QFY19 3QFY19 QoQ gr. 4QFY18 YoY gr.

North America 235 232 1.4% 204 15.2%

Europe 58 58 0.2% 57 1.0%

RoW 32 31 5.5% 23 40.8%

India 29 27 7.2% 25 17.4%

Total 354 347 2.0% 309 14.6%

-as a % of totsl sales

North America 66.4% 66.8% -40bp 66.0% 40bp

Europe 16.4% 16.7% -30bp 18.6% -220bp

RoW 9.1% 8.8% 30bp 7.4% 170bp

India 8.2% 7.8% 40bp 8.0% 20bp

Source: Company, PL

Revenue by Service offerings

Service Revenues (USD mn) 4QFY19 3QFY19 QoQ gr. 4QFY18 YoY gr.

Application Development Maintenance 105 107 -2% 101 4%

Enterprise Solutions 103 96 7% 83 24%

Infrastructure Management Services 39 40 -2% 36 8%

Testing 29 27 9% 26 13%

Analytics, AI & Cognitive 38 39 -3% 33 14%

Enterprise Integration & Mobility 28 26 7% 20 41%

Platform Based Solutions 11 11 -4% 9 22%

Total 354 347 2% 309 14%

-as a % of totsl sales

Application Development Maintenance 29.7% 30.8% -110bp 32.8% -310bp

Enterprise Solutions 29.2% 27.8% 140bp 27.0% 220bp

Infrastructure Management Services 11.0% 11.4% -40bp 11.7% -70bp

Testing 8.3% 7.8% 50bp 8.4% -10bp

Analytics, AI & Cognitive 10.7% 11.3% -60bp 10.7% 0bp

Enterprise Integration & Mobility 8.0% 7.6% 40bp 6.5% 150bp

Platform Based Solutions 3.1% 3.3% -20bp 2.9% 20bp

Source: Company, PL

Larsen & Toubro Infotech

May 5, 2019 6

Vertical- wise revenues

Vertical revenues (USD mn) 4QFY19 3QFY19 QoQ gr. 4QFY18 YoY gr.

BFS 98 101 -3% 89 11%

Insurance 63 62 2% 57 11%

Manufacturing 59 54 9% 53 10%

Energy & Utilities 39 37 4% 36 10%

CPG, Retail 38 37 2% 28 35%

Hi-tech & Media 44 39 12% 33 34%

Others 14 17 -17% 14 -3%

Total 354 347 2% 309 14%

-as a % of total sales

BFS 27.7% 29.1% -140bp 28.7% -100bp

Insurance 17.8% 17.8% 0bp 18.3% -50bp

Manufacturing 16.6% 15.6% 100bp 17.3% -70bp

Energy & Utilities 11.0% 10.8% 20bp 11.5% -50bp

CPG, Retail 10.6% 10.6% 0bp 9.0% 160bp

Hi-tech & Media 12.4% 11.3% 110bp 10.6% 180bp

Others 3.9% 4.8% -90bp 4.6% -70bp

Source: Company, PL

Client Concentration (%)

Client Details 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19

Top 5 clients 36.7% 37.1% 38.3% 38.5% 38.1% 38.0% 36.4% 35.2% 36.6% 36.2% 34.5% 32.2%

Top 10 clients 51.3% 51.8% 52.1% 53.1% 50.9% 50.9% 50.8% 49.6% 50.3% 49.9% 48.4% 47.0%

Top 20 clients 67.7% 67.6% 68.3% 68.0% 66.3% 66.0% 66.1% 65.1% 66.0% 65.5% 64.3% 63.4%

Source: Company, PL

Client Metrics

Client details 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19

Number of Active Clients 259 259 264 261 256 256 289 300 301 312 314 343

New Clients Added 12 16 14 15 12 13 17 15 19 22 17 14

100 Million dollar + 1 1 1 1 1 1 1 1 1 114 121 123

50 Million dollar + 3 4 4 4 4 4 4 4 4 44 47 49

20 Million dollar + 10 10 10 11 12 12 13 13 13 25 25 26

10 Million dollar + 19 20 22 23 24 23 22 23 25 14 15 17

5 Million dollar + 35 34 35 35 35 39 43 44 42 4 5 5

1 Million dollar + 89 91 95 96 97 99 102 109 114 1 1 1

Source: Company, PL

Headcount Metrics

1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19

Total Headcount 19,292 19,751 20,605 21203 22,321 22,554 23,394 24,139 25,150 26,414 27,513 28,169

Development 17,959 18,428 19,234 19627 20,899 21,147 21,979 22,655 23,656 24,923 25,985 26,572

Sales & Support 1,333 1,323 1,371 1396 1,422 1,407 1,415 1,484 1,494 1,491 1,528 1,597

Attrition % (LTM) 19.50% 18.50% 18.10% 16.90% 14.70% 15.0% 14.6% 14.8% 15.1% 15.3% 16.5% 17.5%

Net addition (780) 459 854 598 1,118 233 840 745 1,011 1,264 1,099 656

Source: Company, PL

Larsen & Toubro Infotech

May 5, 2019 7

Effort Mix & Revenue Mix (%)

Effort Mix 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19

Onsite 24.7% 24.2% 24.3% 24.0% 23.8% 23.3% 23.5% 23.1% 23.0% 22.6% 22.0% 21.9%

Offshore 75.3% 75.8% 75.7% 76.0% 76.2% 76.7% 76.5% 76.9% 77.0% 77.4% 78.0% 78.1%

Revenue Mix

Onsite 48.1% 48.8% 47.7% 48.7% 46.8% 46.6% 46.2% 45.7% 46.8% 47.6% 47.8% 47.8%

Offshore 51.9% 51.2% 52.3% 51.3% 53.2% 53.4% 53.8% 54.3% 53.2% 52.4% 52.2% 52.2%

Source: Company, PL

Larsen & Toubro Infotech

May 5, 2019 8

Financials

Income Statement (Rs m)

Y/e Mar FY18 FY19 FY20E FY21E

Net Revenues 73,221 94,404 108,295 125,041

YoY gr. (%) 12.6 28.9 14.7 15.5

Employee Cost 48,507 61,643 70,913 81,277

Gross Profit 24,714 32,761 37,382 43,764

Margin (%) 33.8 34.7 34.5 35.0

SG&A Expenses - - - -

Other Expenses - - - -

EBITDA 12,649 18,781 20,598 24,400

YoY gr. (%) 2.8 48.5 9.7 18.5

Margin (%) 17.3 19.9 19.0 19.5

Depreciation and Amortization 1,563 1,471 1,624 1,876

EBIT 11,086 17,310 18,973 22,524

Margin (%) 15.1 18.3 17.5 18.0

Net Interest - - - -

Other Income 4,102 2,915 2,150 3,000

Profit Before Tax 15,188 20,225 21,123 25,524

Margin (%) 20.7 21.4 19.5 20.4

Total Tax 3,421 5,122 4,943 6,248

Effective tax rate (%) 22.5 25.3 23.4 24.5

Profit after tax 11,767 15,103 16,180 19,277

Minority interest - - - -

Share Profit from Associate - - - -

Adjusted PAT 11,767 15,103 16,180 19,277

YoY gr. (%) 21.1 28.4 7.1 19.1

Margin (%) 16.1 16.0 14.9 15.4

Extra Ord. Income / (Exp) - - - -

Reported PAT 11,767 15,103 16,180 19,277

YoY gr. (%) 21.1 28.4 7.1 19.1

Margin (%) 16.1 16.0 14.9 15.4

Other Comprehensive Income - - - -

Total Comprehensive Income 11,767 15,103 16,180 19,277

Equity Shares O/s (m) 172 172 172 172

EPS (Rs) 68.4 87.8 94.1 112.1

Source: Company Data, PL Research

Balance Sheet Abstract (Rs m)

Y/e Mar FY18 FY19 FY20E FY21E

Non-Current Assets

Gross Block 11,599 13,599 15,599 17,599

Tangibles 4,483 5,883 7,283 8,683

Intangibles 7,116 7,716 8,316 8,916

Acc: Dep / Amortization 7,555 9,026 10,650 12,526

Tangibles 1,975 2,639 3,372 4,219

Intangibles 5,580 6,387 7,278 8,307

Net fixed assets 4,044 4,573 4,949 5,073

Tangibles 2,508 3,244 3,911 4,464

Intangibles 1,536 1,329 1,038 609

Capital Work In Progress 68 68 68 68

Goodwill 2,763 2,763 2,763 2,763

Non-Current Investments 1,109 1,159 1,209 1,259

Net Deferred tax assets 1,789 1,789 1,789 1,789

Other Non-Current Assets 1,980 1,980 1,980 1,980

Current Assets

Investments 12,643 13,643 14,643 15,643

Inventories - - - -

Trade receivables 13,962 18,001 20,650 23,843

Cash & Bank Balance 3,633 5,953 10,926 17,334

Other Current Assets 1,125 1,125 1,125 1,125

Total Assets 53,827 64,235 74,919 87,658

Equity

Equity Share Capital 172 172 172 172

Other Equity 38,426 47,710 57,657 69,506

Total Networth 38,598 47,882 57,829 69,678

Non-Current Liabilities

Long Term borrowings - - - -

Provisions 279 279 279 279

Other non current liabilities - - - -

Current Liabilities

ST Debt / Current of LT Debt - - - -

Trade payables 3,888 5,013 5,750 6,640

Other current liabilities 9,874 9,874 9,874 9,874

Total Equity & Liabilities 53,826 64,235 74,919 87,658

Source: Company Data, PL Research

Larsen & Toubro Infotech

May 5, 2019 9

Cash Flow (Rs m)

Y/e Mar FY18 FY19 FY20E FY21E Year

PBT 14,415 20,225 21,123 25,524

Add. Depreciation 1,563 1,471 1,624 1,876

Add. Interest 157 - - -

Less Financial Other Income 4,102 2,915 2,150 3,000

Add. Other (356) (2,915) (2,150) (3,000)

Op. profit before WC changes 15,779 18,781 20,598 24,400

Net Changes-WC (3,760) (5,384) (3,548) (4,267)

Direct tax (3,581) (5,122) (4,943) (6,248)

Net cash from Op. activities 8,438 8,275 12,107 13,885

Capital expenditures (2,128) (2,000) (2,000) (2,000)

Interest / Dividend Income 539 2,915 2,150 3,000

Others (3,017) (1,050) (1,050) (1,050)

Net Cash from Invt. activities (4,606) (135) (900) (50)

Issue of share cap. / premium 3 - - -

Debt changes - - - -

Dividend paid (3,534) (5,819) (6,234) (7,427)

Interest paid (138) - - -

Others (407) - - -

Net cash from Fin. activities (4,076) (5,819) (6,234) (7,427)

Net change in cash (244) 2,321 4,973 6,408

Free Cash Flow 7,419 6,275 10,107 11,885

Source: Company Data, PL Research

Quarterly Financials (Rs m)

Y/e Mar Q1FY19 Q2FY19 Q3FY19 Q4FY19

Net Revenue 21,557 23,312 24,729 24,860

YoY gr. (%) 29.0 33.2 31.3 24.2

Raw Material Expenses 13,977 15,124 16,125 16,417

Gross Profit 7,580 8,188 8,604 8,443

Margin (%) 35.2 35.1 34.8 34.0

EBITDA 4,190 4,790 5,090 4,765

YoY gr. (%) 18.5 14.3 6.3 (6.4)

Margin (%) 19.4 20.5 20.6 19.2

Depreciation / Depletion 378 367 355 371

EBIT 3,812 4,423 4,735 4,394

Margin (%) 17.7 19.0 19.1 17.7

Net Interest - - - -

Other Income 1,036 943 288 648

Profit before Tax 4,848 5,366 5,023 5,042

Margin (%) 22.5 23.0 20.3 20.3

Total Tax 1,236 1,363 1,268 1,255

Effective tax rate (%) 25.5 25.4 25.2 24.9

Profit after Tax 3,612 4,003 3,755 3,787

Minority interest - - - -

Share Profit from Associates - - - -

Adjusted PAT 3,612 4,003 3,755 3,787

YoY gr. (%) 35.1 46.7 32.7 30.9

Margin (%) 16.8 17.2 15.2 15.2

Extra Ord. Income / (Exp) - - - -

Reported PAT 3,612 4,003 3,755 3,787

YoY gr. (%) 35.1 46.7 32.7 30.9

Margin (%) 16.8 17.2 15.2 15.2

Other Comprehensive Income - - - -

Total Comprehensive Income 3,612 4,003 3,755 3,787

Avg. Shares O/s (m) 174 174 174 174

EPS (Rs) 20.7 23.0 21.5 21.7

Source: Company Data, PL Research

Key Financial Metrics

Y/e Mar FY18 FY19 FY20E FY21E

Per Share(Rs)

EPS 68.4 87.8 94.1 112.1

CEPS 77.5 96.4 103.5 123.0

BVPS 224.4 278.4 336.2 405.1

FCF 43.1 36.5 58.8 69.1

DPS 21.9 28.1 30.1 35.9

Return Ratio(%)

RoCE 31.7 40.0 35.9 35.3

ROIC 45.8 54.7 53.3 55.3

RoE 33.6 34.9 30.6 30.2

Balance Sheet

Net Debt : Equity (x) (0.4) (0.4) (0.4) (0.5)

Debtor (Days) 70 70 70 70

Valuation(x)

PER 24.5 19.1 17.8 15.0

P/B 7.5 6.0 5.0 4.1

P/CEPS 21.7 17.4 16.2 13.6

EV/EBITDA 21.5 14.3 12.8 10.5

EV/Sales 3.7 2.8 2.4 2.0

Dividend Yield (%) 1.3 1.7 1.8 2.1

Source: Company Data, PL Research

Larsen & Toubro Infotech

May 5, 2019 10

Price Chart Recommendation History

No. Date Rating TP (Rs.) Share Price (Rs.)

1 5-Apr-19 BUY 2,032 1,652

Analyst Coverage Universe

Sr. No. CompanyName Rating TP (Rs) Share Price (Rs)

1 Cyient Accumulate 621 585

2 HCL Technologies BUY 1,186 1,093

3 Hexaware Technologies Reduce 325 333

4 Infosys Accumulate 782 748

5 L&T Technology Services Accumulate 1,807 1,609

6 Larsen & Toubro Infotech BUY 2,032 1,652

7 Mindtree Reduce 873 972

8 Mphasis Accumulate 1,090 975

9 NIIT Technologies BUY 1,539 1,348

10 Persistent Systems Hold 618 636

11 Redington (India) BUY 108 98

12 Sonata Software Accumulate 400 346

13 Tata Consultancy Services BUY 2,312 2,013

14 TeamLease Services Hold 3,203 3,031

15 Tech Mahindra BUY 886 777

16 Wipro Hold 247 281

17 Zensar Technologies Accumulate 256 231

PL’s Recommendation Nomenclature (Absolute Performance)

Buy : > 15%

Accumulate : 5% to 15%

Hold : +5% to -5%

Reduce : -5% to -15%

Sell : < -15%

Not Rated (NR) : No specific call on the stock

Under Review (UR) : Rating likely to change shortly

601

944

1288

1631

1975

Jul -

16

Jan

- 1

7

Jun

- 1

7

Dec -

17

May -

18

Nov -

18

Ap

r -

19

(Rs)

Larsen & Toubro Infotech

May 5, 2019 11

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