L&T Technology Services
Topping all charts
Rating: Buy
(CMP: 2663, Price Target: 3100)
Company Description
L&T Technology Services (LTTS) is a leading global ER&D services company, backed by the rich engineering expertise and experience of parent company, Larsen & Toubro. LTTS is a pure-play Engineering Design Services firm with a presence across multiple verticals (transportation, industrial products, telecom & hi-tech, medical devices and process industries).
Key Investment Arguments
➡️We maintain a Buy on L&T Technology Services (LTTS) with a revised PT of Rs. 3,100, given its dominant position in the fast-growing ERD space.
➡️Q3 numbers were impressive, beating our estimates on all fronts; quarter saw record-high
TCVs, healthy deal pipeline, and strong FCF generation; EBIT margin improved 151 bps q-o-q to 15.2%
➡️Management raised annual USD revenue growth guidance for FY2021E to a decline of 6.5% from a 7-8% fall seen earlier, translating into a 3.3% q-o-q growth for Q4FY2021; EBIT margin likely to improve, led by higher utilisation, better revenue mix and operational efficiencies
➡️We expect USD revenue and earnings to clock a CAGR of 19% and 32% over FY2021-23E, led by strong deal wins, conversion of deal pipelines and rising spends in both legacy engineering and digital engineering.
