L&T Technology Services Q4 Review - Fundamentals Intact, Expensive Valuations: Prabhudas Lilladher

BQ Blue's special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..We cut LTTS’s rating to Accumulate from Buy as we cut DCF based target price to Rs. 4549 (earlier: Rs.5428) given expensive valuations on backdrop of possible moderation in ER&D spends (more discretionary in nature) given high inflationary environment, supply chain issues and global macro uncertainties and little scope for further margin expansion over FY23-24 due to higher manpower costs, return of travel costs and investments for future growth. Our EPS estimates cut by 3.3%/4.2% in FY23/24 led by cut in revenue estimates. We assume ~18% margins in FY23 & FY24. FY23 USD revenue growth guidance of 13.5-15.5% YoY USD appears to be conservative given pickup in large deal wins especially in EACV segment in FY22 and all-time large deal pipeline. However, given possibility of moderation in ER&D spends due to macro uncertainties, guidance may not be upgraded by same level as it was done in FY22 (upgraded from 13-15% to 19-20%). Management targets to maintain 18%+ EBIT margin factoring in headwinds from intermittent wage hikes, travel costs, high admin expenses partially offset by tailwinds of growth leverage, better quality of revenues, pyramid optimization and operational efficiencies..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BloombergQuint.Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

L&T Technology Services Q4 Review - Fundamentals Intact, Expensive Valuations: Prabhudas Lilladher

L&T Technology Services Q4 Review - Fundamentals Intact, Expensive Valuations: Prabhudas Lilladher

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