11 December 2019
Update | Sector: Technology
TP: INR2,030 (+24%)
Encouraging strength in deal pipeline
We attended L&T Infotech’s (LTI) analyst day. Key takeaways:
While continuing with the current strategy, LTI outlined a few dimensions of
further focus: (i) industry centric plays, (ii) productisation of services, (iii) people
and (iv) capabilities.
Large/overall deal pipeline is stronger than a year ago by 20%/42%. The strong
focus on new logo addition translated into higher share of new logos in the
pipeline (35% v/s 19% a year ago). However, the share of new-age deals has
moderated marginally (37% v/s 43% a year ago).
Reskilling of 50% of workforce was completed over the last one year, leading to
33% higher fulfillment. Capability agenda is premised on addition of capabilities
both organically and via partnerships.
Regarding the recent Department of Homeland Security (DHS) visit at its New
Jersey office, management reiterated that LTI is committed to the highest level of
integrity and thus it should not be a cause for concern. The strength in the deal
pipeline brings further conviction to our Buy stance.
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
284.4 / 4
1897 / 1437
Financials & Valuations (INR b)
LTI hinted at ~30% improvement in the customer experience index and a strong
increase in employee morale. While continuing with the current strategy, it
outlined a few dimensions of further focus: (i) industry centric plays, (ii)
productisation of services, (iii) people and (iv) capabilities. While productisation
of services has been a strategy emphasized by a few larger competitors, we
understand that the results so far have been mixed. We will have to wait and
Shareholding pattern (%)
Sep-19 Jun-19 Sep-18
watch how differently LTI executes here compared to others.
Continuity in strategy with a few areas of further focus
Deal pipeline strong and encouraging
Large/overall deal pipeline is stronger than a year ago by 20%/42%. New logos
now comprise 60%/35% of the large/overall deal pipeline (v/s 32%/19% a year
ago). The strong focus on new logo addition has translated into a higher share of
new logos in the pipeline. However, the share of new-age deals in the pipeline
has moderated to 37% (v/s 43% a year ago). We note that 67%/49% of the
large/overall deal pipeline is in the proposal stage.
FII Includes depository receipts
Stock Performance (1-year)
L & T Infotech
Sensex - Rebased
Preparing for the new-age talent paradigm
LTI indicated that reskilling of ~50% of workforce was completed over the last
one year, leading to 33% higher fulfillment. Its key capability agenda includes: (i)
strengthening through platforms (e.g. Temenos PFS, Private Eye), (ii) building
new (e.g. AI, ML), (iii) modernizing traditional (e.g. Oracle, SAP), (iv) acquiring
unique capabilities (e.g. PEGA skills) and (v) strengthening key partnerships (e.g.
Sudheer Guntupalli – Research analyst
(Sudheer.Guntupalli@MotilalOswal.com); +91 22 5036 2749
Research analyst: Anmol Garg
(Anmol.Garg@MotilalOswal.com); +912271934271 /
(Mohit.Sharma@MotilalOswal.com); +91226129 1531
Investors are advised to refer through important disclosures made at the last page of the Research Report.
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