L&T Infotech Q1, ACC Q2 Results Reviews: HDFC Securities

HDFC Securities Institutional Equities

Larsen and Toubro Infotech Ltd. - L&T Infotech delivered in-line revenue performance, driven by the banking, financial services and insurance vertical and a large services client ramp-up, offset by the manufacturing seasonality. Our positive stance on the company is predicated on-

1. continuity in BFSI momentum (48% of revenue), supported by deal volumes and a net-new large deal;

2. growth visibility from the deal pipeline of $2 billion, net-new bookings in Q1 FY23 (similar to Q4 FY22 bookings) and large deal bookings expectation in Q2 FY23E, driven by the acceleration of technology programs by enterprises; and

3. strong H2 seasonality for L&T Infotech, joint-go-to-market deals with Mindtree Ltd, and stability in margins, following wage increase in Q1.

ACC Ltd. - The upcoming expansions in the central market will boost its volume growth visibility from CY23 onwards. ACC is also increasing its green power mix and alternative fuel usage to mitigate the impact of rising fuel costs. In Q2 CY22, while consolidated revenue rose 15% YoY (on a low base), Ebitda/adjusted profit after tax fell 51/61% YoY on sharp energy cost inflation.

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