Larsen & Toubro Infotech, a part of the L&T Group, has joined the elite club of stocks with Rs 1 lakh crore market capitalisation on September 17, after showing multi-bagger returns in the last one year.
This is the sixth IT company to have a trillion-rupee market cap, after TCS, Infosys, Wipro, HCL Technologies and Tech Mahindra. L&T Infotech hit a market capitalisation of Rs 1,00,684.67 crore.
Healthy earnings growth, good revenue visibility due to a strong order book, and increase in digital opportunities after COVID-19 have been the key catalysts for the exponential growth of the Indian IT industry.
The stock has given a remarkable performance and gained 58 percent in the current year so far. It rallied 111 percent in the last one year to hit a fresh record high of Rs 5,781 on September 17, outshining the Nifty IT index, which gained 48 percent and 81 percent, during the respective periods.
In fact, it was the fifth-biggest gainer among the stocks in the Nifty IT index in the last one year, after Mindtree (up 228 percent), Coforge (up 142 percent), Mphasis (up 134 percent), and Wipro (up 114 percent). The stock was quoting at Rs 5,747.70, rising 1.40 percent at 12:38 hours IST on Friday.
If one would have held the stock since its public issue in July 2016, he/she would have earned 714 percent gains on the issue price of Rs 710 per share.
“The IT sector is the leader of the current bull run in the Indian equity market and the Nifty IT index is one of the best performing indices in the world. The outlook for the IT sector is looking very strong as COVID-19 is acting as a key catalyst for the exponential growth of the industry, whose management are very confident about the coming years,” said Santosh Meena, Head of Research, Swastika Investmart.
“If we talk about fund flows, outflows from Chinese tech stocks due to new regulations in China may turn into inflows for Indian tech companies as there is more stability in terms of policies and that may lead to a further bullish momentum in Indian IT stocks,” he said.
L&T Infotech is trading at a price-to-earnings (PE) of 47, which looks expensive but the growth momentum is justifying the expensive valuation, he believes.
“The company’s management is confident about future growth and they are eyeing a 14-15 percent profit margin. The company’s hiring policies are also showing confidence about future growth,” said Meena.
The global technology consulting and digital solutions company has recorded a 5.1 percent sequential and 20.4 percent year-on-year (YoY) growth in dollar revenue at $470.2 million for the quarter ended June 2021.
The constant currency revenue growth was at 4.8 percent QoQ in Q1FY22. Profit during the quarter grew by 9 percent, sequentially, and 19.3 percent YoY to Rs 496.8 crore.
“Our healthy pipeline and continued strong demand make us confident about our future growth,” said Sanjay Jalona, Chief Executive Officer & Managing Director of L&T Infotech, in July 2021 after Q1FY22 earnings.
TCS was the first among the IT firms to cross the Rs 10-lakh crore market cap, currently Rs 14,48,215 crore. Infosys is trading at a market cap of Rs 7,27,771 crore, Wipro Rs 3,67,004 crore, HCL Technologies Rs 3,42,668 crore, and Tech Mahindra Rs 1,39,884 crore.
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