Buy Multibagger Stock L&T Infotech With Rs. 5,230 Target Price, Maintains 15% PAT Guidance: Top Brokerage

HDFC Securities, a top brokerage firm recommends investors to buy the stock of L&T Infotech. In the past 5 years, it has given around 489% upside to its shareholders.

Stock To Buy: Target Price & Financials

The Current Market Price (CMP) of L&T Infotech is Rs. 4,812. HDFC Securities has estimated a Target Price for the stock at Rs. 5,230. It is a large-cap stock with a market capitalization of around Rs. 80,587 crore. This stock has the potential to give 8.6% return, in the upcoming 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 4,812
Target Price	Rs. 5,230
Potential 1 year return	8.60%
52 week high share price	Rs. 7,588.80
52 week low share price	Rs. 3,733.30

Financials

The company's net sales in FY22 was recorded at Rs. 156.69 b, which is expected to be at Rs. 195.15 b in FY23. Their EBIT in FY22 stood at Rs. 27.04 b, which is expected to be at Rs. 33.63 b in FY23. The company's adj. PAT in FY22 was recorded at Rs. 22.99 b, which is expected to be at Rs. 27.30 b in FY23.

Stock Advantages: HDFC Securities

According to HDFC Securities, "L&T Infotech continues to be a strong challenger to tier-1 IT companies, supported by strong account mining, expertise solutions aided by prior acquisitions & improved tiering with cloud providers and healthy deal pipeline. We have factored in USD revenue growth of +19/15.8% and EBITM of 17.2/16.9% for FY23/24E. APATM is estimated at 14/13.8% for FY23/24E. Our target price of Rs. 5,230 is based on 29x FY24E EPS, supported by 17% EPS CAGR over FY22-24E."

BFSI growth

CY22 budget is in place by the clients and there is no deferment or cancellation by clients. Out of the total verticals, 65-70% of the portfolio (BFSI, Manufacturing, E&U) for LTI is positioned well and performing better. BFSI growth continues to remain intact with no change in spending by clients. In E&U vertical, there is no big impact as of now and there is no change in outlook with oil prices going up. In manufacturing, there is some caution but there is a good amount of order backlog that provides revenue visibility.

Growth in offshore foray

The European region is impacted more due to currency headwinds and there is no specific impact as of now due to geopolitical issues. 80-85% of the headcount were covered for wage hikes in Q1 (-300bps margin impact) & senior level wage hike impact will be in Q2FY23 (-10 to -50bps margin impact). Attrition was at 23.8% in Q1FY23 and the company believes that it will come down in a few quarters. FY23 is challenging as costs like travel and facility expenses will come back which will create some pressure on the margins. However, the company maintained its guidance of 14-15% PAT margin for FY23, the brokerage firm mentioned.

Company Portfolio: L&T Infotech

L&T Infotech is a global technology consulting and digital solutions company helping more than 495 clients succeed in a converging world, with operations in 33 countries. The company was founded in 1997 as a subsidiary of Larsen & Toubro Limited. Each day, their team of more than 46,000 employees enable their clients to improve the effectiveness of their business and technology operations.

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.