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L&T Infotech: Motilal Oswal Places A “Buy” Call On The Stock


Brokerage firm Motilal Oswal Institutional Equities has placed a "buy" call on the stock of L&T Infotech, and expects industry leading growth for the company.


According to the brokerage firm, the company's 1QFY21 revenue/margin performance was strong (in-line), despite the current challenging environment.

"The sequential growth in its top account was a surprise despite disruptions caused by the COVID-19 pandemic. Large deal wins during 1QFY21 were lower than the typical run-rate, which should translate into stable revenue in 2QFY21 (v/s 1QFY21). However, we believe the company's deal pipeline is strong (+19% YoY) with LTI expected to announce a few large deals in 2QFY21.

L&T Infotech: Motilal Oswal Places A “Buy” Call On The Stock

Twisted seasonality (better 2HFY21) should also aid LTI in reporting industry leading growth in FY21," the Motilal Oswal Institutional Equities said in a report.

Motilal Oswal also noted that the impressive margin management in 1QFY21 gives the company headroom for salary revisions.

"This impact, we would build in from 4QFY21. Notwithstanding this impact and price concessions, we expect net margins for FY21 to remain more or less stable (v/s 14% in FY20). We largely maintain our estimates and expect LTI to be a key beneficiary of the accelerated digital adoption in the the post COVID-19 world. Reiterate Buy." the brokerage firm stated.

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