PremiumBengaluru: L&T Infotech Ltd (LTI) has been one of the very few companies in the industry reporting an actual improvement in the underlying demand—and not a mere cyclical recovery from a low base, ICICI Securities said in a note.
“Its consistent performance continued with 4.8% QoQ growth in constant currency aided by the Middle East deal ramp up. Quality of growth was good with most key verticals and geographies contributing handsomely," the report said. “Growth in top accounts was strong."
Sharp EBIT margin contraction of 300 basis points sequentially was due to wage hikes and investments. Initial traction in data products segment was encouraging, the report said.
While successful execution remains key, absence of deal win announcements in the June quarter was a key disappointment, the report noted. “Nevertheless, growth outlook continued to be strong on the back of healthy pipeline."
The brokerage firm has been ahead of consensus on LTI’s revenue growth over FY23. “Incrementally, like in case of Infosys, margin trajectory should be a key value driver going forward," it said.
“Our FY22-FY23E EPS estimates witness 2-5% revision. Despite rich multiples, we maintain our ‘Buy’ rating given the company’s consistency in execution, industry-leading revenue growth prospects," the report said.
