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BENGALURU: L&T Infotech Ltd. (LTI) will likely have a robust FY23 as the company continues to benefit from strong demand environment which is expected to last three to five years, according to a post earnings report by Motilal Oswal.
“LTI reported a growth of 3.6% QoQ in constant currency on a high base, below our estimate of 4.2%. Growth was broad-based across verticals and service lines. EBIT margin moderated by 60 basis points QoQ to 17.3% in Q4 (inline with estimates) due to lower working days and revenue mix," the brokerage firm said.
L&T Infotech's management, however, has assured of industry-leading growth in FY23 as demand remains strong. It did not forecast any demand postponement despite a volatile macro environment and geopolitical issues.
“LTI is one of the best placed companies in our coverage universe, with a strong client mining ability. Moreover, robust employee addition and its target to hire over 6,500 freshers in FY23 provides further demand visibility," Motilal Oswal said.
The brokerage firm expects it to deliver dollar revenue CAGR of 21% during FY22-24. “While LTI continues to excel on revenue growth, we expect it to maintain its profitability around current levels, given the management’s focus on driving growth with stable margin. It should continue to report net margin in its guided range of 14-15%."
Attrition during the March quarter rose 150 basis points sequentially to 24%, a six-year high, which remains a concern, especially with rising on-site attrition. L&T Infotech's management said attrition is moderating on a quarterly annualised basis and that it will take a few quarters for attrition to fall.