L&T Infotech Jumps 10%, Approaches Record with Robust Second Quarter Results

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Shares of Larsen & Toubro (L&T) rose 10 percent to Rs 6,496.40 on the National Stock Exchange (NSE) in intraday trading on Tuesday after the company reported the highest sequential revenue growth, the best ever recorded for the July-September quarter (Q2), at 8.9% in constant currencies.

The shares of the information technology (IT) consulting and software company of the L&T group were trading near its record Rs 6,498.50 hit on September 24, 2021.

L&T Infotech on Monday announced net profit of Rs 552 crore for the second quarter ended September 30, 2021 (T2FY22), up 21% year-on-year and 11% sequentially. Strong demand drove revenue growth of 25.6% year-on-year to Rs 3,767 crore, while the figure was up 8.8% sequentially.

Growth was widespread across verticals, service lines, geographies and customer groups. The growth of the large-scale industry has been driven by BFS and manufacturing. The company’s profit margin before interest and taxes (EBIT) increased 350 basis points (bps) year-on-year and 270 bps quarter-on-quarter (QoT) to 19.9% ​​in the quarter. The increase in EBIT margins due to SG&A leverage, offshoring and increased number of working days, partially offset by usage and higher costs.

Management said this was the strongest sequential growth the company has seen, taking its annual revenue to surpass $ 2 billion. He expects demand to remain strong over the next three years. Despite the absence of major new contracts in recent quarters, L&T Infotech’s growth momentum is one of the strongest in its history, indicating the pervasive nature of the demand environment, the company said.

The board of directors declared an interim dividend for fiscal year 2021-22 of Rs 15 per share of the par value of Re 1 each.

The company has set October 26, 2021 as the registration date to determine the effective beneficiaries of the participation shares in order to obtain an interim dividend.

Motilal Oswal Financial Services expects a better margin in 2S (v / s 1HFY22), driven by continued strong growth, which will offset the impact on the supply side. “Management continues to focus on growth with a stable margin. We expect the net margin to remain within the 14-15% guided range,” the brokerage firm said in a results update.

The brokerage also increased its FY22E / FY23E EPS by 7% based on the outlook for strong demand, resulting in increased revenue. “Our margin estimates continue to be in line with management’s expectations. As digital becomes mainstream, we expect L&T Infotech to benefit from continued investments in digital capabilities, strong customer additions and its mining capabilities. This should lead to industry leading growth, ”he added.

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