LTI stock down 3% despite decent Q1 earnings
Premium- Revenue growth was led by improved performance of hi-technology, banking, financial services and insurance verticals. However, manufacturing remained a drag
Mid-cap IT services provider Larsen & Toubro Infotech (LTI) reported decent earnings in the June quarter. Its sequential constant currency revenue growth of 4.8% was ahead of the Street's estimates. Revenue growth was led by improved performance of hi-technology, banking, financial services and insurance verticals. However, manufacturing remained a drag.
Reacting to the earnings, shares of the company fell around 3% on the NSE in Friday's early morning trade.
In terms of geography, growth was led by rest of the world, North America and Europe. India saw a decline on a sequential basis, which analysts say, could be due to impact of the second wave of Covid.
LTI added one client in the over $50 million bracket and three new clients in over $10 million bracket during the June quarter. Its total active clients increased to 438 from 427 in 4QFY21.
On the flipside, the company's operating performance was impacted by wage hikes. Ebit margins dipped by 300 basis points (bps) on a sequential basis to 16.4% as the company advanced its wage hike cycle by one quarter to Q1FY22 and absence of one-time benefit of 80bps in the last quarter. Ebit is short for earnings before interest and tax. One basis point is one-hundredth of a percentage point. Analysts say this decline in margin is in line with expectations.
It should be noted that the LTI stock has seen a sharp run-up in the recent past. The stock hit a new 52-week high of ₹4,600 on the NSE on Thursday but it came under pressure due to profit-booking.
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