Pee Vee wrote:valuepicker wrote:l&T infotech aquires syncordis a specialist in banking solutions. Stock has rallied on back of this information There is still lot of steam left in this undervalued script. Target price of 1300 is being talked...
Any view on what's the fair price of this quality stock?
L&T Infotech is an excellent stock. Very high quality management and reasonable valuations. These are stocks to buy and forget and not worry about price targets.
It is good that you have the stock in your portfolio. I agree that the stock is undervalued and has a lot of steam left.
Motilal Oswal has recommended buy of L&T Infotech - Strong visibility on continued outperformance. A good opportunity to buy.
Strong visibility on continued outperformance
Analyst Day Takeaways
We attended L&T Infotech’s (LTI) Analyst Day in Mumbai, where the company highlighted
(i) its readiness on Digital offerings, (ii) efforts undertaken to align its delivery and (iii) the
growth engines needed to continue exhibiting industry leading growth rates. Appended
below are our key takeaways from the event:
Continued leadership on growth rates: LTI has led industry growth over the
past on account of a high composition of Digital revenue (32% of total),
superior client mining abilities (75% of incremental growth over the last three
years, led by top 20 accounts) and timely investments in the business.
Positioning because of progress on all these vectors has been favorable,
leading to continued expectations of revenue growth pick-up in FY18 and
positive momentum in FY19.
Supported by strong visibility: Visibility for continued outperformance for LTI
comes from [1] the uptick it has seen in large deal wins, TCV of which over the
last six quarters has totaled USD300m, [2] strong deal pipeline, 59% of which is
in proposal stage, 36% is Digital and 20% is with new logos, [3] the addition of
65 new logos in the last 12 months, many of them being in the USD1m+
bracket and [4] significantly higher growth than industry average in four
verticals (59.5% of revenue) and four service lines (53% of revenue).
Steady outlook on margins led by investments…: LTI maintained its target net
profit margin band of 14-15%, despite the strong revenue outlook.
Performance on margins is being capped because of a calibrated investment
approach taken by the company. Prioritizing growth, LTI has been investing
heavily in augmenting its offerings and fueling its sales/marketing engines.
Levers for maintaining stability at the operating level are in the form of higher
digital revenue, operational excellence, cost optimization and prudent risk
management.
…to up Digital offerings…: While Digital constitutes 32% of total revenue,
because of its ADEA (Analytics and Digital in Every Account) initiative, 88% of
LTI’s clients have been penetrated with at least one of these services. Its
strategy of digitizing the core, adopting a subscription model, pivoting on
platforms and productizing its services, combined with leveraging of its
MOSAIC platform, has resulted in a set of cutting-edge capabilities executed
using next-gen delivery models.
…and to augment the sales function: The sales team at LTI has seen a major
overhaul, with 65% of the team hired over the last two years. A few of the
progress metrics are as follows: [1] account mining is being driven by the
Minecraft program, which focuses on the top 50 clients, [2] new logos are
being targeted in a very selective fashion, [3] efforts are undertaken for a
proactive pipeline generation using 100+ industry experts, [4] tail accounts are
being elevated by moving them to the USD1m+ category and [5] a high-quality
pre-sales team is set up, with 40% of it being onsite.
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