Motilal Oswal has a buy call on L&T Technology Services with a target price of Rs 3130. The current market price of L&T Technology Services is Rs 2591.55.
L&T Technology Services Ltd, incorporated in the year 2012, is a Mid Cap company with a market cap of Rs 27301.41 Crore, operating in IT Software sector.
L&T Technology Services’ key Products/Revenue Segments include Service (Engineering) for the year ending 31-Mar-2020.
Investment Rationale
Motilal Oswal said, while L&T Technology Services has delivered largely flat growth over FY19-21 (1 per cent revenue CAGR) due to Covid-19 and ramp down at key clients (partly due to external issues), Motilal Oswal expects a strong growth rebound (17 per cent CAGR over FY21-23E).
After a sharp 200 bps dip in margin in FY21, due to the Covid-led impact, the company should be more than able to recover margin over the next two years on favorable operating leverage, leading to 29 per cent earnings CAGR over FY21-23E.
Motilal Oswal’s target price of Rs 3,130 per share implies 30x FY23E EPS. It anticipates improved industry spends compared to the previous five years.
Financials
For the quarter ended 31-03-2021, the company has reported a Consolidated Total Income of Rs 1475.10 Crore, up 1.77 per cent from last quarter’s Total Income of Rs 1449.50 Crore and down 2.18 per cent from last year same quarter’s Total Income of Rs 1508 Crore. Company has reported a net profit after tax of Rs 195.30 Crore in the latest quarter.
