Home / Markets / Mark To Market /  LTI stock down 1.6% as management cautious of near-term, supply-side pressures
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Midcap stock Larsen & Toubro Infotech (LTI) is once again on the radar screens of investors after its management said that it remains confident of cloud, data and digital services to drive revenue growth, at a recently held analyst meet.

Sharing its growth plan, the management aims to boost its revenues by mining existing clients and investing in new high potential verticals and markets, among other measures. Demand continues to be strong across all verticals, markets and service lines with a new large deal pipeline at USD 2.07 billion, a growth of 9% year-on-year (y-o-y), the management said. The management added that demand is shifting towards medium-sized short cycle deals, which is driven by discretionary spends. Further, the LTI retained its margin guidance at 14-15% and said that the company continues to focus on reinvesting to capture incremental market share rather than the margin uptick. “We see this as an indication of the company’s willingness to absorb pricing pressure, unlike peer commentary on price hikes," analysts at Motilal Oswal Financial Services Ltd said in a report.

While the demand outlook remains robust, the shortage of talent is still a pain point for the sector and the company. It should be noted that despite massive hiring in the recent quarters, the company’s management cautioned that the supply side is a near-term concern and it expects the situation to ease over the next four-six quarters. This could be one reason why shares of the company fell around 1.6% on the NSE in Friday's opening trade.

Meanwhile, in the last year, the LTI stock’s price has almost doubled with 99% returns, comfortably beating the Nifty IT index, which is up nearly 57% in the same span. Analysts say, the sharp uptick in the stock captures most positives and has led to a sharp valuation re-rating. At a one-year forward price-to-earnings, the LTI stock is trading at a multiple of around 45 times. The stock is much more expensive than some largecap technology peers such as Tata Consultancy Services Ltd.

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