Larsen & Toubro Infotech (LTI) shares fell on Wednesday as analysts from brokerage firms Citi, Nomura and JPMorgan lowered their earnings per share (EPS) estimates for the IT company a day after it reported financial results.
The LTI stock dropped by Rs 316.9 or 5.8 percent to end at Rs 5,169.3 apiece on BSE, having declined to as low as Rs 5,100.8 apiece during the session.
Post-market hours on Tuesday, the technology consulting and digital solutions firm reported a net profit of Rs 637.5 crore for the period between January and March, up 4.1 percent on a quarter-on-quarter basis and in line with Street estimates.
The IT company's revenue, though increased four percent sequentially, was short of analysts' expectations.
| Metric | CNBC-TV18 poll |
| Profit | Rs 636 crore |
| Revenue | Rs 4,352 crore |
| EBIT | Rs 757.5 crore |
| EBIT margin | 17.40% |
| Dollar revenue | $578.5 million |
LTI reported sequential growth of 3.6 percent in revenue in constant currency terms and announced a final dividend of Rs 30 for the year ended March 2022.
The company's shares declined in the run-up to the earnings announcement.
How brokerages are reading LTI's results
Nomura maintained a 'neutral' rating on the LTI stock with a target price of Rs 5,970.
The brokerage said the company's financial results for the final three months of the financial year 2021-22 were a mixed bag, with softer-than-expected revenue growth due to onsite supply-side challenges.
The company's earnings before interest and taxes (EBIT) largely met estimates, but that was due to savings from Selling, General & Administrative (SG&A) expenses, according to Nomura.
The brokerage cut LTI's earnings per share (EPS) estimates for the financial years ending March 2023 and March 2024 by around three percent.
Nomura prefers Persistent Systems among midcap IT stocks.
| Brokerage | Rating | Target price |
| Goldman Sachs | Sell | Rs 4,570 |
| Citi | Sell | Cut to Rs 5,045 from Rs 5,605 |
| JPMorgan | Overweight | Cut to Rs 6,400 |
Goldman Sachs said LTI's results were in line with estimates with a strong order book.
Citi said the company's quarterly performance was soft with revenue and margin slightly below expectations.
The brokerage revised LTI's EPS estimates for the financial years ending March 2023 and March 2024 by 2-3 percent, and lowered its multiple to 32 times from 35 times citing demand-margin risks.
JPMorgan lowered Larsen & Toubro Infotech's EPS estimates for the current financial year and the next by six percent, revenue by 2-4 percent and margin by 80-150 basis points.
The brokerage also said the LTI stock has underperformed the Nifty IT by seven percent on a year-to-date basis. It, however, sees this as a buying opportunity with limited risks to earnings.
(Edited by : Akanksha Upadhyay)
First Published: Apr 20, 2022 10:05 AM IST
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