Neutral LT Technology; target of Rs 3850: Motilal Oswal

Moneycontrol • 11 days ago

Original source

Key Investment Pillars

  • Growth momentum: Expected to strengthen in 2H, supported by conversion of previously won large deals, improving order backlog, and ramp-up of ongoing engagements.
  • Sustainability segment: Continues to drive growth, with revenue up 4.9% QoQ and 13.4% YoY, contributing ~38% of total revenue.
  • Margin expansion: EBIT margin improved 60bp QoQ to 16.3%, driven by favorable segment mix, AI-led productivity gains, and tight SG&A control.
  • Deal wins: Large deal momentum continues, with TCV of USD 203m in 2Q, and over 50% of wins being AI-led.

Thesis Validation Checklist

  • Revenue growth: Watch for stronger revenue growth in 2H, driven by conversion of large deals and improving order backlog.
  • Margin performance: Monitor EBIT margin performance, expected to remain at mid-16% levels despite wage hikes.
  • Sustainability segment growth: Track growth in the Sustainability segment, which is expected to continue driving overall growth.
  • Deal pipeline: Keep an eye on the deal pipeline, with a focus on AI-led deals and large deal wins.