Goal is to get back to the FY18-19 growth levels– LTTS

Goal is to get back to the FY18-19 growth levels– LTTS

Update on the Indian Equity Market:

On Wednesday, Nifty closed 0.9% higher at 13,692. Within NIFTY50, HINDALCO (+2.8%), BHARTIARTL (+2.8%), and HDFC (+2.8%) were the top gainers, while ICICIBANK (-1.1%), INDUSINDBK(-1.0%), and ULTRACEMCO (-0.8%) were the top losing stocks. Among the sectoral indices, REALTY (+5.1%),METAL (+1.8%) and AUTO (+1.0%) were the top gainerswhilePSU BANK (-1.6%) was the only losing sector.

Goal is to get back to the FY18-19 growth levels– LTTS

Excerpts of an interview with Mr. Keshab Panda, CEO, L&T Tech Services, aired on CNBC-TV18 on 15thDecember 2020
● The new normal is presenting new opportunities for engineering and technology companies like L&T Tech Services (LTTS).
● LTTS recently received a USD 100 mn + plant engineering order from a global oil and gas major. The deal is the biggest ever plant engineering deal in India and includes sustenance engineering, control automation, smart manufacturing, and efficiency improvement.
● The revenue contribution of the deal will start coming in FY22E onward.
● The current deal is for 2 plants of the client. The opportunity could be much more than that if extended to other plants. The opportunity in the 2 plants itself could extend by 50-100%.
● For this deal, the model will be 20% onsite and 80% offshore.
● The deal wins pipeline has increased multifold from the pre-covid levels.
● The revenue growth for FY18 and FY19 was 20% and 26% respectively. Growth came down to 8%-9% in FY20 due to customer issue. Now the goal is to get back to the FY18-19 growth levels quickly.
● LTTS is also working on improving margins from the 2QFY21 levels.
● Among sectors that LTTS operates in, plant engineering is doing well, medical is doing best, transportation except aerospace is also coming back.

Consensus Estimate (Source: market screener website)
● The closing price of LTTS was ₹ 1844 as of 16-December-2020. It traded at 30x/ 23 x/ 20x the consensus EPS estimate of ₹ 62.6/80.5/92.4 for FY21E/ FY22E/ FY23E respectively.
● The consensus target price of ₹ 1750/- implies a PE multiple of 19x on FY23E EPS of ₹92.4/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

Share this post

Leave a Reply

Your email address will not be published. Required fields are marked *