Buy L&T Technology Services, target Rs 1,940: Anand Rathi

Overall, the results were in line with our expectations in both USD and rupee on revenue front while marginally better in profitability terms. We have a buy with a target of Rs 1940 per share.

L&T Technology Services reported a growth of 27.3 percent in Q4-FY19 at Rs 1343.1 crore as against Rs 1054.8 crore in the same quarter previous year. In dollar terms, the growth was 17.8 percent at USD 191.3 million in Q4-FY19 YoY while constant currency growth stood 20 percent. The growth was mainly driven by Process, Transportation and Medical devices verticals.

For the full year, the revenues grew 36 percent at Rs 5078.3 crore and 26.5 percent in constant currency at USD 723 million.

On the profitability front, the EBITDA margin for the quarter stood at 18.5 percent at Rs 249.1 crore as against 16.1 percent at Rs 169.5 crore in Q4-FY18, an improvement of 240 basis points. On full year basis, the EBITDA margins stood at 18 percent at Rs 915.7 crore in FY19 as against 15.5 percent at Rs 581.1 crore in FY18, an improvement of 250 basis points.

The profit after tax margin for the company stood 14.3 percent in Q4-FY19 at Rs 191.5 crore against 15.1 percent at Rs 158.8 crore while for the full year PAT margins stood 15.1 percent at USD 7,656 million in FY19 against 13.5 percent at Rs 506 crore.

During the quarter, L&T Tech won nine multi-million dollar deals across all industry segments. On a YoY basis, it increased its USD 50mn+ clients by 2, USD10mn+ clients by 4 and its USD5mn+ clients by 10.

Overall, the results were in line with our expectations in both USD and rupee on revenue front while marginally better in profitability terms. We have a buy with a target of Rs 1940 per share.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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