In past three months, LTI and LTTS have outperforming the market by gaining 53% and 44%, respectively, against 8% rise in the benchmark index.
LTTS had reported a strong 24.9% q-o-q growth in net profit at Rs 123 crore in Q2FY18. Revenue grew 9.5% q-o-q to Rs 901 crore. In US dollar terms, revenue grew 9.2% q-o-q at $ 139.3 million. On cc revenue basis revenue grew 8.7% q-o-q and 12.4% y-o-y.
LTI had posted a better than expected net profit in September quarter (Q2FY18). The company reported a profit of Rs 273 crore for Q2FY18, up 2% from Rs 267 crore in the previous quarter. Revenue grew 5% q-o-q to Rs 1,751 crore. On constant currency (cc) revenue basis revenue grew 3.5% q-o-q and 11.7% y-o-y. Analysts on an average had expected profit of Rs 267 crore on revenue of Rs 1,721 crore for the quarter.
In analysts meet, LTI management reiterated that 2HFY18 revenue growth would be stronger than 1H (YoY), and given the current deal wins and pipeline, even FY19 outlook looks strong. Management indicated that deals worth USD1 billion are in the pipeline for which it is competing with peers.
“Given clear evidence of strong execution in FY18 and outlook for FY19, we forecast 12%/10% revenue/EPS CAGR over FY17-20. We believe increasing visibility on revenue growth and management guidance of stable margin profile of 14- 15% would drive further rerating for the stock,” analysts IIFL Institutional Equities said in a report. However, the stock is trading above 12-month target price of Rs 1,130.
Positives for the company include a favourable delivery mix, industry-leading return ratios (highest in midcap IT), strong cash generation (100% FCF/PAT) and increasing payout, and strong leadership bandwidth, according to analysts at HDFC Securities.