L&T Infotech Q4 Results Impact: Shares crack over 6% after reporting below estimate numbers; brokerage slashes target

After reporting lower-than-estimated March quarter results, shares of Larsen & Toubro Infotech Limited slumped over 6 per cent to hit a day’s low of Rs 5143.4 per share on the BSE intraday during Wednesday’s trading session. 

The mid-cap IT company L&T Infotech on Tuesday reported a 16.8 per cent Year-on-Year (YoY) jump in the March-end quarter net profit to Rs 637.5 crore as compared to Rs 545.2 crore a year ago.  

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According to the company’s filing to exchanges, the profit was driven by healthy growth in its revenue on higher deal flow. The revenue from operations rose by 31.57 per cent to Rs 4,301.6 crore in the fourth quarter of the financial year 2021-22 (Q4FY22), from Rs 3,269.4 crore YoY. 

The stock at around 12:10 PM was trading almost 6 per cent lower to Rs 5167.6 per share on the BSE as compared to a 0.68 per cent rise in the S&P BSE Sensex. The counter has corrected over 30 per cent year-to-date, while it slipped over 13 per cent in the last month on the BSE. 

According to Kotak Institutional Equities, L&T Infotech’s revenues missed street estimates; EBIT margin declined sequentially, while Forex gains cushioned the impact at the net profit level.  

The company believes it can deliver industry-leading growth in FY23E, while keeping its net profit margin in the unchanged 14-15 per cent band, the domestic brokerage said. 

Kotak Institutional Equities cut FY23-24E EPS by 2-3 per cent to account for margin headwinds and said it like the scalability attributes of L&T Info’s business but finds current valuations expensive. It maintained a Reduce stance with a target of Rs 5,500 apiece valuing the stock at 29X FY2024E EPS. 

L&T Info's CEO and MD Sanjay Jalona said that the company wishes to be in the top quadrant of growth in the IT sector and the same will help protect its margins as well.