L&T Infotech hits record high, L&T Tech surges 7% in a weak market

In the past one week, the stock of L&T Technology Services outperformed the market by surging 25 per cent, against 1.5 per cent decline in the S&P BSE Sensex

Shares of Larsen & Toubro (L&T) Group technology services companies were in focus at the bourses on Tuesday, rallying up to 7 per cent on the BSE in intra-day deals in an otherwise weak market.

The stock of L&T Infotech (LTI), a global technology consulting and digital solutions Company rose 6 per cent to Rs 3,615, surpassing its previous high of Rs 3,515, touched on October 12, 2020. In comparison, the S&P BSE Sensex was down 0.06 per cent at 45,525 points at 01:18 pm.

For the July-September quarter (Q2FY21), LTI reported strong revenue growth numbers and healthy margin expansion. LTI's constant currency dollar revenues increased 2.3 per cent quarter on quarter (QoQ), higher than analyst estimate of 1.1 per cent to 1.5 per cent. Better pricing, utilization, and off-shore mix drove robust improvement of 250 basis points (bp) QoQ / 440bp YoY in the EBIT (earnings before interest tax) margin to 19.9 per cent.

LTI signed large deals of $456 million, up 43 per cent in the last twelve months, incl. $209 million (over six years) from the UAE-based Injazat. It has a large deal pipeline of $1.9 billion, up 62 per cent y/y, offering assurance of 10 per cent plus growth ahead though conversion to revenues was slower in FY20 (total pipeline growth: 42 per cent, revenue growth 13 per cent), analyst at Anand Rathi Share and Stock Brokers said in stock update.

L&T Technology Services (LTTS) rallied 7 per cent to Rs 2,315 on the BSE in intra-day trade today. The stock hit a record high of Rs 2,343 on Friday, December 18, 2020. LTTS is a listed subsidiary of L&T focused on Engineering and R&D (ER&D) services. The company offer consultancy, design, development and testing services across the product and process development life cycle.

In the past one week, LTTS has outperformed the market by surging 25 per cent, against 1.5 per cent decline in the S&P BSE Sensex. The trigger for the recent rally has been the multiple deals that the company has won in the ongoing December quarter, and expectations of a recovery in the ER&D segment.

Among the few deals announced recently was the five-year deal of over $100 million to provide engineering services to a global oil and gas major for its two integrated refining and chemicals facilities in the US. The company was also selected by Swiss firm Schindler, which makes elevators and escalators, in a multi-year deal for digitisation and connectivity solutions.