IT company Larsen & Toubro Infotech and Cement manufacturer ACC Ltd posted their results for the quarter ended March 2022 on Tuesday. The former reported a 16.8 per cent jump in the March quarter net profit to Rs 637.5 crore, while the latter reported a 29.5 per cent decline in consolidated net profit to Rs 396.33 crore in the quarter. The jump in net profit of L&T Infotech is attributed to healthy growth in its revenue on higher deal flow, while ACC reported a decline in the profit largely due to the rise in fuel cost.  

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Post their results, brokerage house ICICI Securities remained unimpressed with their numbers in the March quarter and maintained a buy rating with reduced target price on ACC and downgraded L&T InfoTech to hold rating.  

Larsen & Toubro Infotech 

"LTI trades at an expensive valuation of 38x/31x for FY23E/24E; we downgrade to REDUCE from Hold. We value LTI at 28x (vs 32x earlier) on FY24E EPS of Rs178 to arrive at a TP of Rs4,986 (prior: Rs 5,921)," said the brokerage house.  

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L&T InfoTech’s revenues missed our and street estimates in Q4FY22, said Amit Agarwal, Vice President, Fundamental Research, Kotak Securities. Further, Gross margin declined 100 bps qoq and 200 bps yoy to 30% in Q4FY22, an all-time low since the IPO listing, he highlighted.  

"EBIT margin declined sequentially and could be under pressure in FY23E. We like scalability attributes of LTI’s business, but find current valuations expensive and do not see any upside. Hence, we maintain REDUCE rating on the stock with a revised Fair value of Rs5,500, valuing the stock at 29X FY2024E EPS, said the expert.  

ACC Ltd

On ACC, ICICI securities said that reduction in fuel cost remains key trigger for the cement manufacturer and maintained a buy rating with reduced target price of Rs 2,615 per share. Earlier, the brokerage firm pegged its target price at Rs 2,710 a share. 

Speaking of ACC results, Amit Agarwal said ACC’s Q1CY22 EBITDA came in ahead of our estimate which was led by lower-than-expected costs.  

Demand is gradually recovering in Q2CY22E and cement players have also started taking price hikes from mid- March 2022, he said. Agarwal said that coal and diesel cost inflation continues to remain a key area of concern for cement players. "Further price hikes are required to fully absorb the cost pressures.  We maintain an ADD rating with revised price target of Rs2,180 on the stock," added Kotak Securities VP. 

On Monday, Larsen and Toubro Infotech closed 5% lower to Rs 5204.95 per share, while ACC Ltd gained more than 7% to Rs 2207.40 a share on the BSE 

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