{"id":2311,"date":"2021-10-21T12:37:23","date_gmt":"2021-10-21T12:37:23","guid":{"rendered":"http:\/\/www.assetmultiplier.co.in\/blog\/?p=2311"},"modified":"2021-10-23T04:18:33","modified_gmt":"2021-10-23T04:18:33","slug":"increased-revenue-guidance-due-to-robust-demand-environment-larsen-toubro-technology-services","status":"publish","type":"post","link":"https:\/\/www.assetmultiplier.co.in\/blog\/2021\/10\/21\/increased-revenue-guidance-due-to-robust-demand-environment-larsen-toubro-technology-services\/","title":{"rendered":"Increased revenue guidance due to robust demand environment \u2013 Larsen &#038; Toubro Technology services"},"content":{"rendered":"<p><b><span data-contrast=\"none\">Update on the Indian Equity Market:<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">On Thursday, NIFTY closed lower at 18,178 (-0.5%) led by IT (-2.5%), CONSUMER DURABLES (-1.8%), and METAL (-1.8%). PSU BANK (+2.7%), BANK (+1.3%), and FINANCIAL SERVICES (+1.2%)\u00a0 were the gaining sectors.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><span data-contrast=\"none\">Top gainers in NIFTY50 were KOTAKBANK(+6.9%), TATAMOTORS (+4.5%), and GRASIM (+3.5%). The top losers were ASIAN PAINTS (-4.9%), HINDALCO (-3.8%), and INFOSYS(-2.5%).<\/span><span data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><\/p>\n<p><span style=\"text-decoration: underline;\">Edited excerpts of an interview with Amit Chadha, MD, and CEO of L&amp;T Tech Services\u00a0 with CNBCTV18 on 20th October 2021:\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"none\">The company has increased its FY22 revenue guidance for the second consecutive quarter to 19-20 percent from the previous 15-17 percent owing to the strong demand and robust supply chain.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">Earlier the company had anticipated a USD 1 bn runrate between Q2FY23E and Q3FY23E, which could be met sooner than expected.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"none\">The company took on board about 1,200 freshers in the last six months and plans to hire about 2,000 in 3QFY22E and 4QFY22E.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">On the margin front, the company has delivered\u00a0EBITDA\u00a0margins in the 18% range despite the wage hikes and the overhead costs in FY21, going forward the company expects them to stay in the 18 percent range.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><\/li>\n<li>With the robust market environment and the company&#8217;s order pipeline improvement to about 18% over 1QFY22, the company&#8217;s overall aim is to reach a USD 1.5 billion run rate by FY25.<\/li>\n<li>The company expects the demand for CY22 and CY23 to remain at the current level.<\/li>\n<li>The average deal size in the engineering business is between USD 10 million and USD 25 million. The firm has landed a number of transactions ranging from USD 10 to USD 25 million. They are also looking for agreements worth more than USD 50 million.<\/li>\n<li>The offshoring revenue has increased by 100 bps. The company expects the offshoring revenue percentages to stabilize and improve further on account of the optimistic demand environment from its clients in the United States and Europe, in CY22.<\/li>\n<li>On the acquisition front, the company is looking for a US or European-based company in the ISV segment or transportation segment, or in the medical technologies segment. The company is currently assessing different companies for the purpose and is in various stages of conversation with different companies.\u00a0 The company has an appetite for acquiring a company with a revenue of 50 million dollars as well, given the company\u2019s strong balance sheet and cash flow.<\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">\u00a0Asset Multiplier Comments<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><\/p>\n<ul>\n<li>The management commentary of continued strength in end demand aided by significant deal wins, and healthy deal pipelines suggest growth could significantly exceed the upper end of the revised guidance.<\/li>\n<li>The aggressive recruiting and re-skilling initiatives, will assist the business to overcome supply-side limitations.<\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">Consensus Estimate (Source: market screener websites)<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"none\">The closing price of Larsen &amp; Toubro Technology services was \u20b9 4726\/- as of 21-Oct-21. It traded at 54x\/46x\/39x the consensus EPS estimate of \u20b9 88\/102\/121 for FY22E\/ FY23E\/FY24E respectively.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">The consensus target price of \u20b9 3,965\/- implies a PE multiple of 32x on FY24E EPS of \u20b9 125\/-.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"none\">Disclaimer: \u201cThe 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.\u201d<\/span><span data-ccp-props=\"{&quot;201341983&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:360}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Update on the Indian Equity Market:\u00a0 On Thursday, NIFTY closed lower at 18,178 (-0.5%) led by IT (-2.5%), CONSUMER DURABLES (-1.8%), and METAL (-1.8%). PSU BANK (+2.7%), BANK (+1.3%), and FINANCIAL SERVICES (+1.2%)\u00a0 were the gaining sectors.\u00a0Top gainers in NIFTY50 were KOTAKBANK(+6.9%), TATAMOTORS (+4.5%), and GRASIM (+3.5%). The top losers were ASIAN PAINTS (-4.9%), HINDALCO [&hellip;]<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[87,575],"tags":[],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2311"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=2311"}],"version-history":[{"count":3,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2311\/revisions"}],"predecessor-version":[{"id":2315,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/2311\/revisions\/2315"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=2311"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=2311"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=2311"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}