Home / Markets / Stock Markets /  IT stock down 48% from 52-week high. Brokerages say buy post Q1 results

IT company Larsen and Toubro Infotech on Thursday posted a more than 27% increase in consolidated net profit at 633.5 crore in the first quarter ended June 30, 2022. It had registered a profit of 496 crore in the same period a year ago. 

The consolidated income from operations of Larsen and Toubro Infotech (LTI) increased by 30.6% to 4,522.8 crore during the reported quarter from 3,462.5 crore in the June quarter last year. Banking, financial service and insurance sector was the biggest contributor to the company's revenue.

“Demand environment continues to remain robust for the company; though few clients have become cautious about evolving macroeconomic situation. Offshore and onsite employee attrition has started to moderate and that should ease pressure on margin," said Yes Securities in a note.

The brokerage has Buy tag on the IT stock with a target price of 4,960 apiece. Shares of L&T Infotech are trading about 48% from its 52-week high level. Part of the L&T Group company, LTI is a global technology consulting and digital solutions company.

“We expect it to be among the growth leaders in the Tier 2 IT companies led by its capabilities across verticals and service lines and should be able to maintain net margin of 14‐15% for FY23. Its hiring target for FY23 remains well on track and that offers strong revenue growth visibility. It continues to remain one of our top picks in Tier‐2 IT space, well positioned to capitalize on robust demand environment," the note added.

“We continue to expect strong growth and offshoring to drive margin resilience. We maintain our PAT margin estimate within the management’s guided range of 14-15% as LTI’s focus is on driving growth with stable margin. While we remain confident of the management’s execution capabilities, we remain on the sidelines in the stock, due to a significant valuation re-rating," said another domestic brokerage Motilal Oswal which has neutral tag on LTI shares with target price of 4,120 per share. 

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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